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Central Iowa | I believe the simplified version is that commercials have no incentive to hold with no carry. Combine that with strong basis levels and they WILL start to move crop, thus naturally curing the strong basis as more crop comes to market. This is personally why I've been VERY aggressive moving both corn & beans to market, both on basis contracts and pricing previous HTA's. Strong basis is self-explanatory but lack of futures carry allows a guy to roll forward without giving up any or very little of the spread(specifically soybeans). If you are a flat pricer in this environment you are likely to miss some very good opportunities as you wait for a futures rally that may or may not come. As farmers we have to think like the commercials do. Throw in that some merchandisers(Cargill) will pay you a 70% advancement on a basis contract and it's a win/win. | |
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Maize or Ray
