Why do ethanol plants and soybean crushers charge a basis?
They don't.. they "post a bid" If the bid is too low and they don't get enough they bump it higher.. if the futures board rallies and farmers move grain.. and they get "covered up" they lower their bid..
The difference in their "bid" vs the CME is referred to as a basis.. it only reflects the difference..
If the Export market heats up.. the "basis" narrows at the river.. while interior demand may remain flat.. or vice versa.. it's not some Grand conspiracy.. it's just "markets at work." |