Remember Your Pricing Signals

[errolanderson]

Here's how the combo of futures and
basis can help trigger marketing
decisions.

1. Strong Futures / Strong Basis
'Sell the cash' marketing signal.

2. Strong Futures / Weak Basis
Hedging signal . . . sell the futures
and/or buy put options.

3. Weak Futures / Strong Basis
Sign a basis contract or sell the cash
and replace with paper ie: futures/call
options.

4. Weak Futures / Weak Basis
Farm storage signal . . . time to make
your grain bins pay.

Where do your grains fit in the current
market scenario?

[ado089]

Lock the bins because they know that we
know that stuff but we know that there's
not alot of grain in the world this
year. I also take positions directly on
the markets so that no one company can
accurately forecast what grain they will
get from me, it helps make them squirm
on the basis if enough guys do that.
I've been telling Cargill that their HRS
basis is twice as wide as it should be
since September and low and behold I get
a call today it's been cut in half this
week. I gave them some basis contract to
reward their good behavior

[ado089]

Here's another scenario. OK basis, OK
futures, deceptive production reports,
choppy trade = Buyers fishing for business
to see who will bite before they show
their cards.