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SC Iowa | If you buy cash corn now and carry into the next marketing cycle, you have about an 85% chance of getting creamed on the basis/spread side of that transacation.
How so??
December '13 futures are trading at 6.25.....you should be able to buy corn from one of your good neighbors for somewhere between even with the board and -25 the board come next fall....let's say it is the former, so that corn would cost you 6.25
Now, if you decide to buy corn today and carry it all the way to next fall, you are likely looking at 7.65 or more plus the interest cost, and maybe a little something for quality risk, too.....so buy the time you get to next fall and could have been buying that new crop corn for 6.25 or less....you will have 7.70 to 7.85 in your old crop corn that was carried ahead....
If you really think that you cannot buy cash corn next fall---well, I think you have a lot of other problems to be worried about first.... | |
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? about buying corn calls?
