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Honored Advisor

Corn basis map




 

 

3 Replies
Veteran Advisor

Re: Corn basis map

Isnt' it odd that basis is defined as local cash price minus the nearby futures price, but everyone says it the other way - basis is 20 cents under the Dec or something like that.  Does that make any difference in how you view markets?  Would it make a difference if you said the board was 30 cents over Eddyville?  You still have to do the math in your head but I guess everyone knows what the board price is so it's easier to use it as a departure point rather than the other way around.

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Honored Advisor

Re: Corn basis map

I think it makes a big difference. And may, inadvertently, signal a change of " what" is price discovery now that cbot left the US for WWide commissions.

We historically let the futures buyers and sellers determine value and basis was logistics between where it's at and where it is needed.

But now it's different. Futures is much more a speculation and rumors market than the actual change of ownership. I often wonder what % of trades is involved with ownership transfer and what% is just purely trend speculation.

So maybe the basis is filling a bigger roll than historically.
We are still in harvest and the basis variance is wide and sending much of this crop right to ethanol.
Not a good omen for the local cooperative.
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Veteran Advisor

Re: Corn basis map

Some of the things I learned 40+ years ago are no longer accurate today, more so in the last 10 years than the prior 30.  

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