Is the last basis hurrah.................

[roarintiger1]

........ occurring now?   The local ethanol in my neck of the woods increased their corn basis today to $1.75 over the August.   Is the CBOT really that far out of the loop?

[Hobbyfarmer]

Yep 

[rayjenkins]

were you boys saying the same thing in 1996??

because basis was just as wild and crazy in late July and August that year....

maybe it's more the fact that people aren't willing to trade Sept as an old crop month----after all, if you will study the history of the U/Z corn spread, it eventually closes to even money or very close to it by the time Sept goes into delivery......

[roarintiger1]

Nope......I wasn't on the internet.

I do believe that we have a totally different set of fundamentals now, compared to 1996.   One has to be pretty careful when comparing one year to another.  Of course, the ending results could be the same. The only rule now is.....there are no rules.     If I knew for sure, I would be on the beach somewhere holding a cold beverage. 

[c-x-1]

i have a funny feeling August this year might diverge from 1996 - August

.......much higher risk of lack of new bu ready to market by the time Sep goes off the board this year----if I'm remembering the cold, wet, delayed planting and emergence through V6 across much of the Corn production area. 

[rayjenkins]

RT.....please explain these "completely different fundamentals"

what does being on the internet have to do with a corn spread chart??

CX1---1996 crop was even farther behind than what we are in this year....

[roarintiger1]

Ray,   The world needs much more corn than it did in 1996. It costs much, much more to raise a bushel of corn. It costs more to buy a bushel of corn.   We are coming off a drought disaster......heading to another possible disaster......or a record crop.   We have more of a world market than we did in 1996.   USDA is making predictions that are based on possibilities.....not probabilities.  Farmers are more secure financially than they were in 1996.  We are coming off three or four years where forward contracting grain has been the wrong thing to do.  Need I go on?

The fundamentals that are still the same are.;...Farmers want the highest price they can get for their crops......End users want to pay the lowest price they can to get the crops.......and market advisers want you to send them more money...... The cash price of corn in 1996 was much higher than you could forward contract new corn for.

You asked if we were saying the same things in 1996.....I said no, because information wasn't as availble to us like it is today with the internet.

Ray, I'll ask you..... is this the top of the basis ride? or are end users still needing corn for another 2 months?  I don't think that I need to tell you that sometimes, timing is everything.

[wiley356]

so ray .. i am a bit confused here ... awhile back you touted getting basis locked ..(side note i have bout 10000 bu unpriced ) ... so if i  had done  this   you know bushels are coming and sept futures don't have to rally and  all you have to do is bump basis every now and then to buy some ... basis has increased another  20 cents or so since then ....sure seems like a cat and mouse shell game doesn't it ?

[c-x-1]

Fair enough Ray, re: corn being more behind in 1996.

I know not this answer -- do you remember positions of specs and commercials back then?  i know from the charts, the specs had to be pretty long by now............................

[rayjenkins]

RT.....your original post was regarding old crop corn......but you seem to be fixated on many other things...

you also said:

The cash price of corn in 1996 was much higher than you could forward contract new corn for.

Isn't that true today??......same $1.75--2.00 cash inverse and limited new crop selling

now, THIS is for both RT and Wiley:

look, I have no idea where the top of basis might be, but it sure looks like you folks must believe it is going to get a lot better from here........I guess you are much more worried about missing out on the last 20 cents that may be there than making sure you don't miss out on the $2 that it will eventually change

best of luck fellas.....

Ray J