Jul 24, 2014
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Trade the Farm

RSS By: Thomas Grisafi, AgWeb.com

We trade what you grow!

 

Back to Basis

Mar 07, 2014

Earlier this week I was on US Farm Report with Tyne Morgan and the whole show seemed to be about the surge in corn, beans and wheat prices.  Most of these commodities are marking record highs of the past 6 months.  These giant rallies have given the American farmer a great selling opportunity……or have they?

Let’s go back to basics, literally, the basis. 

In 1989 I went on a high school field trip to visit the Chicago Board of Trade.  The energy, passion and intensity grabbed me and I was a goner from then on.  In my 25 years in this industry I have never, not once, seen a grain truck making deliveries on LaSalle Street.  That is because price is discovered at CBOT/CME, but you sell your grain in your backyard.

And our basis is falling apart.  Think back to a couple of months ago when corn was around $4, your local basis was probably twenty cents under CBOT.  Now when we are close to $5 corn I bet your basis is running forty cents under CBOT.

Check your own local basis, you’ll probably find that they have softened anywhere from five to twenty five cents in the last week alone.

Tell me what you think, where’s your basis? Contact me at 855-737-FARM or anytime on Twitter @tradethefarm

 

 

 

 

 

 

 

 

There is a significant risk of loss in trading futures and options.  Futures trading is not appropriate for all investors.  Please read our full risk disclosure atwww.tradethefarm.com

 

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