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Ontario's middle east | Why does basis follow spreads? In simplest terms in this circumstance, as the carry shrinks and guys aren't getting paid to store corn, they will say, "might as well sell it now". As more sellers show up basis gets pressured. Remember that basis traders don't care what the flat price is, they are hedged. This is why Ray said in 97 the commercials sold the strong basis and farmers held the carry out. I wouldn't bet on a different out come this time around. | |
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Here's what you needed Ray
