Basis Bet: Sell Old-Crop Grain Now

July 22, 2013 10:00 AM
Basis Bet: Sell Old-Crop Grain Now

Producers who want to become better marketers should take five minutes each day to chart their local basis, says Mark Gold, Top Third Ag Marketing, during a U.S. Farm Report Market Roundtable discussion at Corn College in Heyworth, Ill. Doing so will help them identify critical moments for action such as current high basis prices.

"If you’ve got corn or beans in the bin from ’12, I have no idea what you’re waiting for to sell," Gold says. "You’ve got high prices, record-high basis. I mean, what is it you’re looking for? … The good news is that what’s happening in the old crop is helping drag the new-crop prices up, which gives you guys a great marketing opportunity."

Mike North, First Capitol Ag, agrees.

"Basis is a function of local supply and demand, and if you’re in an area where someone’s willing to pay you $2 over the board, you should take advantage of that," North says. "When we’re in a scenario that people are willing to put the money out, you need to take their money."

At the same time, producers should be cautious, says Bob Utterback, Farm Journal economist.

"The biggest negative out of this, long-term, is we’re going to get used to these high basis levels and expect them to continue," Utterback says. "This is a very, very short-term phenomenon. Do not let this suck you into thinking basis is going to stay tight into next year, when carryover goes back to normal levels."

Watch the videos below to hear more of this discussion as well as a look at future prices for 2013-14 and what producers can do about them.

Watch Segment 1 of U.S. Farm Report Market Roundtable:

Watch Segment 2 of U.S. Farm Report Market Roundtable:

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Spell Check

7/22/2013 02:13 PM

  Where are these phantom bins with all the corn in them !?

7/22/2013 02:13 PM

  Where are these phantom bins with all the corn in them !?


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