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| What I don't understand about basis and carry decisions is as follows:
Just because basis and carry are telling you right now that you should sell the physical now, who is to say that basis alone will not more than make up for it by March? Let's say you hang on to it until March and farmers STILL aren't blinking. Let's say the futures price for each month does not move a penny between now and then but since farmers are not selling basis is now +0.50 instead of -0.27 like your chart says?
If a guy sold his physical now he would be kicking himself in March to hear crazy basis offers.
All that being said, I think it could sure go the other way too. Farmers may very well want to get rid of all of their corn by then and basis may collapse for those months too? | |
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What is the basis and carry in the cash market telling me?
