West Central MN (between MMF and Larson's) | Trying to wrap my head around your "basis following the spread" mantra. Not trying to be a smart alec at all, just trying to understand.
You are saying the spread=Carry in the market. So your saying with the carry going away that basis will weaken as well?
In the past I interpreted your mantra to mean that if we had strong carry markets that Basis would widen/weaken. Now if I'm reading you right you think the spread/carry is tightening that will pressure basis to widen/weaken.
Again just trying to learn from those in the know.
I have been going under the premise of June/July will be like second harvest here. It is my belief that many will get raped on basis at that time if setting at the market. Due to that thought we have locked a significant amount of basis or sold and went long futures to hedge basis. Still some left but less than 10-20% for cash with puts under it that are in the money. Trying to determine incorporate your mantra into the though process on our last bu. as well as learn for the long haul.
Appreciate your insight. |
Maizing
