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| The big commercial buyers have been letting someone else raise the crops for years. Ever notice how narrow the basis can get when supplies are adequate, but locked away in the farmer's bin? Now we are seeing adequate supplies, and they do not want to raise cash quotes to match futures. If the basis was staying strong (narrow), it would reflect commercials buying the market. They need grain. Right now it seems there are other factors moving the market higher, but the commercials have current needs met. Basis is historically wide during harvest because commercials know a certain amount (10-15%) is always sold off the combine. No need to bid, we'll get it anyway. | |
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Why raise cash crops??
