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SC Iowa | Yep....what he said......Maize summed up the crux of the matter....
It feels like we are going to have a couple of competing forces working in corn spreads most of the year......first, the market's need to keep corn coming at a pace that will keep the domestic users running at full tilt......but secondly, a carryout of 1.760 Byn means someone is going to have to carry corn from year to year...well, eventually........so we likely have narrow spreads first half or more of the marketing year......and then if the farmer parks a lot of corn in the CCC loan program, and we have a good crop coming in 2016, then we end up with a late season flush of corn coming into the marketing channels, and that would force the U/Z and U/H spreads out to sizable carries....
I recognize that many of those reading these comments are "flat pricers".....they just want to know what the price of corn is today.....and believe if the user would just pay $4, they could have all the corn they want.....but most of the time it is a more of a cat and mouse game than that......and as Maize has pointed out, once the commercial elevator loses their ability to earn money by hedging and storing grain, then they become a speculator, and their bankers may not look favorably on that situation, so they become a seller...
spreads and basis activity is an area where just a 2-3 cent move can be the difference between "crickets" from the commercial elevator to offering corn to the market in increments of 250K to 1 myn bushels at a whack.....and when it starts trading in those volumes (well, at least in our part of the world), I can guarantee you that basis bids will be actively changing.....those are the days when you may see your market change it's bid 2-4 times between morning and closing time....
Ray J
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Maize or Ray
