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buying calls as insurance
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billybob
Posted 9/9/2010 21:59 (#1353350 - in reply to #1353272)
Subject: Re: buying calls as insurance


68340

I nor you can control what the basis will be.  The basis will be what ever the elevators want it to be. 

I was trying to express that a person needs to be able and willing to sell when he thinks it is correct.  On the board or a cash sale.

For me and my location I have watched the basis over the years and have learned what they do in general.  That is, in fall the basis is larger than in the spring/summer.  For example, I knew I have X amount of bushels sold for delivery this fall, but the basis not yet set.  I talked to the elevator over the summer and got my basis at -.43.  They had been there most of the summer, for fall delivered corn.  I looked the other day and it is -.55.  Neighbor I harvest with was complaining about the basis.  I know he did not visit with the elevator every 3-4 weeks, or more through the summer watching this.  He just lost himself .12.  I also know the basis generally gets better in the spring.  I have some Mar 2011 corn to go in also and have not yet set the basis, but watching.  I also know I have July 2011 corn to go in and the average normal basis the elevator post is -.40 to -.45, as of today for July 2011 corn.  I believe I can wait and get a basis much closer to -.35 and I have even seen it get to -.15 or -.20 for July 2011 corn.  The elevator here orders unit trains, 100 car, and they get shipped full or empty, so they will really cut the basis to get corn in to fill a train if they need to.

So I don't like the big basis the elevator charge because they want to make a killing sometimes, but there is nothing I can do about it.  I concentrate on the things I can do something about. 

P.S.  I think I said, " sell on the board".  Yes, with a broker. 

Elevator won't offer a reasonable basis.  Shop around.  Put up a bin.  Get a truck.  Figure it out.   

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