| ObSeRv - 4/17/2024 19:30
Confused.
If you haul on free DP, you’re recommending to sell CZ4 on your own hedge account to protect the downside, giving up any potential high side, and playing the basis game.
Correct?
First off I don't recommend using DP at all. I think it hurts prices and basis every time you use it
If you MUST move grain it might make sense for SOME of you to sell the carry on the board at some point and wait for basis.
As example if you are in a tight supply area that doesn't harvest until mid Oct and you have free DP until Oct. Then you might sell Dec futures in your own hedge account and wait for the rolls and basis to be off of the Dec which will happen in late August early September
The carry in the board pays for interest. So it becomes a basis play.
If you can avoided DP then do it. But if you already have corn on free dp then get the most out of it as possible.
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How to take advantage of free DP in a carry market - audio comments
