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Alton, Ia | Good other posts. To add, you need to factor in interest cost or at least savings rate when you look at carry. My saying is if you have one dollar of debt, it's all debt, meaning, every dollar I have out there needs to return my operating note interest rate, or else I should sell it and pay down the note some. IE the 20+ yo Malibu I use to parts run is costing me $70 per year in interest, because I have debt.
Same with stored grain and carry. Local bean bids are 10.70 March del, 10.88 July. 10.70 * .07 /12 = 6.25 cts per month interest cost. Five months $.31, to gain .18. No bueno. Maybe the July rallies, maybe not, but at least consider interest cost.
Now to corn. Local March bid 4.27, July 4.09. Inverse carry. Farmers are holding corn, feed mills need corn, (this is in Sioux County), so the nearby basis is +.04. So it does not pay to store corn, UNLESS you think future basis will tighten and/or July future rallies.
It looks so easy.........
Edited by Oliver1 3/1/2024 10:09
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what is carry
