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Honored Advisor

Re: Corn Basis 2015

Ray makes me think a little more............ appreciated

 

It is really only a basis issue.  And in supply/demand terms our location is probably as good as the gulf in terms of corn.  You get the barge cheap corn from Jolly Green Giant country and we get some of  their train traffic.  Feeding is a bigger share of corn usage than export so my assumption that your basis should be bigger than ours is probably not right for corn........... except for spot needs.

 

Historically check it out.  See how it compares----- especially to the seasonal basis pattern.  For us I would say "It is a year out,  who would be offering you anything but a normal seasonal basis with carryout expected as Ray says"?

 

Do you need destination?  Can you take it where you want too without a committment of some kind.  Can you be locked out of storage without a commitment?  I used basis contracts for years to guarantee storage in over surplus years.  If it is a basis that is good and a location you intend to go the only issue is will the owner be there next fall?  I have seen basis contracts sent to other locations.

 

One thought,  maybe not for you,  --- Basis has always reflected transportation costs, as well as transportation problems, and more than ever now, is used to get it from here to there.  IMO, Ray might have a better view of it,,,,, corn is less mobile than we traditionally thought.......we raise more, we have lots of storage, we have more end users in production areas, our train and truck handling is more congested and not updated since years ago when production and usage in all grains were much less. and it all costs more.....etc etc.  

All this has volatized price by location and will do the same to basis.  I am not sure we have adjusted yet to the size and traffic patterns of our demand.

 

 

 

 

 

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Contributor

Re: Corn Basis 2015

Thanks for the input guys. Greatly appreciated. Hope you all have a Happy Thanksgiving!
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