So tell me this then

[Mizzou_Tiger]

interesting responses thus far on $4.50 corn

I figured everyone would say heck yes, $4.50 for 2015 corn, instead most said no.  sure suprised me.

so tell me this then

if beans really do tank (and I am in the camp that certainly sees it as a possibility) then how do you navigate a basis positive area in the midst of a large crop knowing no matter how many acres are planted in 2015 your area will probably grow less beans because 2014 was soooo good thus basis could rip higher since its already very attrative in the midst of a big crop?

do I lock in some HTA for May-July 16 delivery and hope the board tanks and basis rips $1-$3 higher?  $11 or $12 beans possible with this combo.

[BA Deere]

I`m not smart enough to understand what you just asked, so I can`t answer.  It does look though like "everybody knows" that beans are going to tank $2 this fall, everybody knows that.  So, why are they offering us $9 right now?  Why did China load up on $12 beans not all that long ago?

Joe Vaklavik was on with Al Pell saying that corn and I think beans have been in a bear market since 2012, one of the longest bears thus far, so something will turn it, just no one knows yet what that will be.  I suppose the bear chartists saw this bear market way back in 2012..but it took mid point of 2014 to really break, that`s probably why they were so owly and so darned happy when it finally did break to their side.  A year and half of margin calls wasn`t fun. 

I`m just going to be at the mercy of RA crop insurance if a Black Swan doesn`t bail me out this year.  Because I have a feeling if beans rally to $9.50...whatever news that will be will spook me too much that I`ll be relucant to pull the trigger on any sales.  The carrot will be dangled just out of reach for me to commit to a sale until I have it in the bin.

[vrbuck]

Why can't you do both.  jYou can sell out of the field in the fall to the elevator, for cash flow purposes.  You can then turn around and buy back those said bushels in options or futures.  Look to purchase back from july to sept in increments or roll the dice and wait for a sept bottom.  You are not limited to just selling grain anymore.  The only possible short coming with this strategy is basis.  If you want to not sell off the combine hedge on a spring rally and store the grain in the bins.  I wouldnt recomend this strategy if you need cash flow.

[Mizzou_Tiger]

still waiting for the spring rally, patience I guess

physcially selling off the combine doesnt work for my operation for lots of reasons.  so its all going into the bins.  cash flow is not an issue.  basis is usually much better by spring as well.  we where one of the areas a year ago with a bean basis that was approaching $2.50 over.

I am setting here looking at a CBOT that is going to want to tank beans, yet locally in the midst of a big bean crop they are scrambling for bushels already and have a nice basis going and we havent even stepped into the spring delivery lul yet that usually adds another 20 cents.  So if we have a more normal crop this year, then by next spring they will be needing those bushels and if futures have tanked basis should be quite nice.

and yes, shorting the board and lifting next spring at delivery is an option

point is, i think i need to keep basis open at least for beans and try to capture futures price before it could head to $8 or lower

[kyu2852570]

Jeez mizzu must of been a long cold winter if you are ready to sell corn for next summer at 4.50. Not a bad plan tho I'm sure you can make decent money maybe attach a call at some point. I can't believe the amount of money a hta can make on bins right now just to roll to spring to a processor versus hauling to a captive elevator at harvest.

[Palouser]

Options aren't close to free, and if they are they aren't very efficient. Unless you have a crystal ball. But crystal balls aren't free, and if they are .............. well, you know.

[wrightcattle]

OUT of most everything too.

beans haqppen to fit that to a T btw.. 

we'll see..

[timetippingpt]

Hey Palouse...deep in the money options are very effecient in the grains. Of course, they are not free, but they are very capital effecient. We just locked basis on the rest of the old beans at an amazing 18 over basis. Can buy a $9 call for only 5 cents time value.

There are ways to use options effeciently, you just can't do what everyone else does (buying very expensive out of the money options)

IF, and I am not sure the market is convinced, but if everyone knows beans are going $1.80 lower, then I would argue that it is a great time for bearish report that creates a bear trap in new crop beans. It is money flow and the money has stopped flowing out of a lot of commodities or the flow is rapidly slowing.

Another important point mizzou, you have 7 replies to that thread, hardly a database big enough to give any credence too. Plus, all the research shows that only those emotional concerned take time to respond to such a thread. So, in reality, the data point is worse than useless. fwiw

[ihtractortherap]

If only we were all as smart as you Time!

[timetippingpt]

What did I say to warrant that IH?

From what I hear in the country there are a great many folks praying for a bullish report next week so that they can convert inventory into cash at a "fair" price.

For those people it would be a much better business decision to fix the basis and deliver and then buy a deep ITM call after the report. If I sounded arragant about the math of it, I am sorry. Just thought I was stating facts as we see them.

Again, sorry to offend.