This will happen, somewhere. Maybe in your market? With inverses in corn and soybean spreads, some buyer(s) will start buying grain off a deferred futures before everybody else. If you are a farm, or merchant, make sure when comparing bids you are comparing cash prices.
Below is the corn futures settlement recently:
Below are two fictitious bid sheets side-by-side in a local market
Who has the best bid for April?
Acme grain buyer calls and says, “I got a 6 over bid for April delivery.”
You say, “Wow, ABC is -.12, lets do it, write me up 10,000 bushels.”
Do not only compare basis bids. Always compare cash-to-cash on bids. Acme is +6 over the July board for $5.45 cash for April delivery. ABC is -12 under the May futures which is $5.46 cash for April delivery. ABC’s -12 cash bid is the best bid. But it takes “merchandiser math” to figure it up.
There will be buyers doing this soon if not already, be very careful, pause, and figure up the cash-to-cash comparison. (Its implied you compare freight differences between locations as well, for this example, assume the farm is equal distance to each location).
Bull and bear scale is updated for the week. Read at your own risk. Have a good Sunday evening.
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Cullen Wilson works as a grain buyer and resides in South Dakota. Grain Marketing Stack is a side project where Cullen proposes valuable topics to grain marketers and merchandisers. The opinions stated in this newsletter are not that of his employer or affiliates. You may contact him at email@example.com Follow him on twitter @sanegrain .
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Your grain marketing and merchandising situation is fact dependent and you should seek the appropriate advice.