2017 Fall Farm Outlook

2017 Logan County Fall Farm Outlook Magazine LINCOLN DAILY NEWS Oct. 25, 2017 Page 27 Which buyer or seller to use Bids and offers reflect different basis levels. Check around to see which buyer or supplier is bidding or offering the most attractive basis. When to purchase, sell, or store a crop Does the current price reflect the average basis or is it stronger or weaker? What do you anticipate happening in the market? When to close, or “lift,” a hedge If the basis improves or equals your estimated basis level, it could be a sign to purchase or sell a commodity and close your hedge. Whether, when, and in what delivery month to hedge Is the basis quoted off of a deferred futures month more attractive than the nearby futures month? And when and how to turn an unusual basis situation into a possible profit opportunity Merchandisers and basis traders make a living managing basis levels. They must keep their eyes open for unusual basis patterns to improve profit margins or avoid losses, while maintaining their bids and offers at a competitive level. In conclusion, while basis consists of a simple mathematical equation of cash minus futures, it can be a valuable tool in the helping local producers to maintain profitability under less than ideal conditions. References Understanding commodity futures Basis - Go Futures – CBOT guide book https://www.gofutures.com/pdfs/ Understanding-Basis.pdf Corn and Soybean Price Basis | Ag Decision Maker https://www.extension.iastate.edu/agdm/crops/ html/a2-40.html Understanding Basis Signals In The Grain Markets http://www.cornandsoybeandigest.com/ understanding-basis-signals-grain-markets Understanding and Using Basis – Grains http://rnrinag.uwagec.org/RnR%20 Section%203/RnR%20Understanding%20 and%20Using%20Basis%20Grains.pdf The Farmer’s Grain Marketing Guide https://ageconsearch.umn.edu/ bitstream/15814/1/er040001.pdf