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cropsey, il 61731 | We sold rather than store since the basis was good (and it's getting better). I'm trying to get a call spread going (buy around $4, sell around $4.50). Just to be obtuse I have a couple of basis contracts that hopefully result in a higher sales price. In your spot in a year where I have little confidence in market direction, wouldn't be nice to set a floor somewhere? Sell the call at the top and buy a put to set a floor? I know it usually just makes a bmw or sailboat payment for a trader, but it might work.
My thinking regardless of technical features is that this dropping basis (been dropping since harvest started) is the market trying to tell us a story. The folks setting basis don't take a vote and set it such that they are making money. Apparently 'they' want the grain. This is ECIL so maybe it's just a mid point between Ind. where yields suffered and out west where things are good. However, it's almost like yields just were not that great in general. Not terrible, but many elevators were not empty this fall in anticipation of poor yields. I think yields were better than expected, but expectations were very low. When this all shakes out, maybe we have a reason for corn to be in the mid $4's at least for a short time. To me a moderate supply issue will not make a long term price run up because demand hasn't built up yet (cheap prices will help that eventually). | |
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Selling Calls against stored bushels
