| white shadow - 11/18/2024 07:38
The markets have been very brutal this last year on those who have basis fixed contracts to the front months. Last two weeks before expiration is brutal. Going to be hard to get a corn rally when all the farmers are wringing their hands on their bushels tied to December. Farmer selling on the December will make a corn rally difficult.
Commercial hedging is based on the premise that basis improves over time as farmer selling is matched up to hedges.
aka the system is built around futures going down.. which drives basis higher..
Locking in a basis bid fights that tendency.. furthermore, why would a user bid higher on basis then what they can sell?
it’s counterintuitive to expect better basis offers now.. vs later.. the bigger risk is the board going down. |
Front month contracts......
