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Honored Advisor

Re: Very wide basis (Wheat)

Understand and agree Ray, 

 

It is nearly a contract crop from the start, and not representative of the wheat trade.

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Honored Advisor

Re: Very wide basis (Wheat)

Ray I still think we loose some functionality in the futures market as it becomes more of a global trade.  So much so that it does not serve the rationing of supply function.....    Not on a regional basis.  There could be a serious lack of supply in regions...

 

Is that a missconception?

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Veteran Advisor

Re: Very wide basis (Wheat)

This is what happens when you have a variety of "subset" crops 

 

Now, I suppose the answer is to have a futures market for just white wheat, but highly doubtful there is enough volume to make it a viable situation

 

look at milo----uses corn as it's primary pricing mechanism and then you get a year like this with outsize export interest and basis has to do the work of bringing it all to market....

 

no easy answers.....but I also do not believe there is a villian lurking either in the  shadows, either

 

regards,

 

Ray J

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Highlighted
Veteran Contributor

Re: Very wide basis (Wheat)

I am not a big proponent of Tech analysis but for those that are, here is something I saw this morning....

 

wheatapril7th.png

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Honored Advisor

Re: Very wide basis (Wheat)

Ray from the production side of this discussion   ----- and I apologize if i said something to involks fear mongering  ------ but I am not fond of totally relying on basis for market fluxuation.  

Using the wheat example.......

If the perpetual (and unavailable) supply in india and China are going to "temper" the futures market fluxuation in the US midwest.....

 

 

Anyway it looks to me like we soon, if not already, reach a point locally where all deals are negotiable......... The "haggle" market.  A responsive futures market at least kept that civil.... even though it has always been present.

 

Obviously a good relationship with your actual market remains very important.

 

Doesn't distance and freight make all regional trade "subset" crop markets with the futures market harvesting bigger fish.  

 

 

Or maybe I am still struggling with the fact that CBOT, as many other entities and economies have, have technically moved on to the world function, ................. maybe if they would change that to the WBOT-----  Smiley Happy

 

 

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Senior Contributor

Re: Very wide basis (Wheat)

    Please don't invite that W into anymore acronyms than there already are!!!!!

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Senior Advisor

Re: Very wide basis (Wheat)

SWW is nothing like a contract crop. Never has been, never will be. It's just a regional wheat that fits the PNW region very well and services the Pacific Rim and other areas and needs. Other wheat and feed varieties are also part of the export menu.

 

There was a SWW exchange in Minneapolis but it didn't maintain enough volume to continue. SWW also went through some huge upheavels in customers for political reasons. Pakistan, Iraq, Iran, etc.

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