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S Illinois | My guess is less of scare tactic and more of reality. No elevator/merchandiser wants to carry any bu of corn or have any sitting in their bins when new crop comes on. Easy to carry inventory when spreads/basis is not inverted because of everything they buy is worth more later on. Anything they buy in this markets now looks to be worth less in 45 days. Good way to loose a a bunch of money for them.
Edit: A merchandiser or elevator seldom if ever looks at straight board price. It’s all basis/spreads to them. Say the local bid structure has Aug- Sept 15th at +80U or +83Z. In Oct, say basis goes to the more normal -10Z. This mean that every bu an elevator buys, they have to turn around and find a buyer above the +83 or face a 93 cent loss by Oct 1. They may speculate that basis will get better in 2022 but that’s only a 25-40 cent play still leaving them 40-70 cents short. It’s a tough game to play and the odds are against them making it work.
Edited by w1891 8/5/2021 16:27
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U vs Z
