I had a few producers call in and ask my thoughts about selling $8 corn. The basis has actually moved high enough in some areas producers say they are being offered close to $8.30/bu. As I told each of them on the phone this morning, anytime you can book sales above $8, I think you should be taking advantage of the situation. I actually have one client, who with these sales, will have ended up averaging over $8/bu. this year on his crop...unbelievable!
There where also some questions about re-owning after making these sales. I just don't see any reason at this juncture, especially with such good cash sales being booked. My fear is the board itself doesn't have tremendous upside potential (the "risk-to-reward" just isn't that exciting). In my opinion it is more the basis in select areas that could see this biggest jump. For producers who are still waiting on the basis to improve you may want to consider making sales on the board or booking HTA type contracts with your local elevator to lock in flat price then you can simply play the basis. I would not sell the cash and re-own the board. If you move the cash bushels call it a day and bank all of the profits. No need to jump back in at this level and risk the premium.
I also want to make sure those of you holding old-crop bushels understand the window of opportunity is narrowing for banking these types of profits. Remember: The markets are always the strongest when the most fear is in the air. Right now end-users are worried they might not have enough supply. What happens when some type of solution to this problem becomes more of a reality, i.e. more corn coming down from Canada, more coming from Brazil, Argentina, etc.? What happens when the place you normally sell your corn starts railing in more bushels and has to pass along the expense by reducing the basis they are offering you? Be smart, don't be greedy!
For the rest of the story including more insight into what traders believe are influencing market prices currently, sign-up here to receive a RISK-FREE 30-Day trial of my daily Grain and Livestock commentary. So many advisors want to tell you exactly how to market your crop, I want to teach you to better understand the markets and how you should respond. If you are looking to be educated and not just told what to do, simply click here and get started!