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| Best line for someone who doesn't know what basis is or how it works is...
“You will almost never find grain marketing rewarding you to establish the futures and basis prices on the same day, because normally if futures are high, basis will be low and vice versa.”
Ed, The points raised in this explanation are very valid and also very valuable for two reasons; 1) there can be/is a big difference in basis levels(for example nearby basis in East St. Louis was 5 over dec last friday, one week prior it was 9.5 under the dec. 15cents difference), 2) when one couples basis improvements w/ futures carry to pay for grain storage you will see why/how elevators can make "good money."
Cash price means little; futures + basis is important, though seldom on the same day!
hope this helps, | |
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5 ways to use basis
