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Senior Contributor

Re: Scare tactics ?

I agree Ray and in a normal year it evens it self out. because when prices rise sharply the basis widens and vice versus when it drops. My thought is that in a year like last year there are guys that will gamble. beacause they can afford to or are stubborn or whatever and end users  will have to pay up no matter where  the futures are trading at. Going back to my question the only way I can see it costing a enduser a lot of money is if they were long futures and are in a tight ending stocks area and the price of cash corn hasn;t come down. In my area cash corn as of today is 60 cents lower than the day of the last stocks report while July futures are about the same

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Senior Advisor

Re: Scare tactics ?

We have a positive $1.50 basic on corn and a Positive $1 basis on beans for june/ july delivery at the local coop. It doesn't appear to me the government action has much impact on the cash grain market. 

 

However, I wonder how high corn futures or soybean futures would be if specs could buy futures and demand delivery.

 

As to new crop supplies, We have to prove there will be a shortfall. The market doesn't care if we have late crop or a high drying bill. They only think about bushels and if new crop is slow coming to harvet they will bid up the remaining old crop until the combines start.

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Senior Contributor

Re: Scare tactics ?

Kraf't maybe?  maybe not who's to say we wouldn't have the same basis if futures were at levels around 7.50 before the last stocks report

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Senior Advisor

Re: Scare tactics ?

I don't think so. The spec market is the spec market. Basis IS the cash market, what buyer one will pays seller one. Basis is merely a comparison between the spec market and the actual cash market.

 

In fact it might be advantageous to a commercial to be able to hedge inventory against a higher futures bid. His cash bid is what he wishes to make it to buy inventory. Competition helps him determine what his basis might be.

 

My logic might be wrong but that is the way i see it. I don't think there is any conspiracy for government to depress prices. I don't know how they would gain from that.

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Senior Contributor

Re: Scare tactics ?

I never said the stocks number was right or wrong and I don't believe in government conspiracy. My arguement is that the enduser got a gift if the number ends up being  wrong back in Jan . Ray was stateing it most likely cost some commercials money having futures going down which I say is wrong, 'because I feel the basis would still be just as strong in the short crop areas no matter what price the futures are trading ..

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