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SC Iowa | Very few want to accept the fact that their is money to be made on storage hedges in a carry market.....but the only way to capture that is to set the hedge and then set the basis......seems everyone is in "I want my MTV, and I want it now" mode....
For the person with on farm storage, we are now just 6 cents away from being able to roll a Dec 14 hedge out to Dec 15 for 50 cents.......now, to maximize the value of that transaction you may either have to carry that corn to aug/sept of 15 and/or sell the corn in spring/early summer of 15 on a sizable basis opportunity in their local markets.......and you can generate cash flow via 1.125% CCC money for 9 months, so a very low cost of carry to start earning back value....
ya know, that is also a strategy that will work nicely should you get greatly reduced acres and/or a mid summer weather problem in 15 as that July/Dec 15 carrying charge would likely disappear, forcing the front end higher and possibly narrowing basis as well.....we call that "being bullspread cash against futures".....
I always feared that once we got away from flt/inverted/strong front end basis values we would go right into the current scenario, where everyone is fixated on the front end market, which is the "cheap" slot starting in about 3-4 weeks...
but I recognize there are reasons for all of that, too
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$3 corn and prospective planted acres, the driver.
