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Adams, NE | A wise merchant taught me the basis is like buying (or selling TV's). In times of tight supply and demand, you are willing to pay about any price for that TV to get your True Blood (an HBO series) fix. Then as prices rise more sellers appear. We are in a situation where there is an excess of TV's (cash corn or cash wheat) today. You start getting hourly phone calls of people selling TV's. At some point, you say I do not need another TV regardless of the price/quality. Some people do not care if you offer them the newest and best TV at bottom basement prices...the wife (or plant in this case) says NO MORE!
And I agree with Ray...it does feel like the late nineties and early 2000's. The only difference this year versus those times is the greater influence of the commodity hedge funds and index funds. Back then, the futures would eventually break reflecting the excess supply of cash grain on the market. With the false (non-cash) demand created by these funds, futures may just keep going up and cash will have to reflect the true near-term fundamentals in the US (wheat is that way today).
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Corn basis...what's going on...
