It is the end of October and you are harvesting corn. Your cash price is $3.00 per bushel.
It is the end of October and you are harvesting corn. Your cash price is $3.00 per bushel. You are considering storing the grain until the end of March. Your storage cost are estimated at $.03 per bushel per month. December Corn is trading at $3.60 per bushel and March Corn is trading at $3.72 per bushel. Your typical harvest basis is -$.50 per bushel and your typical basis in March is -$.40 per bushel.
a. What is your current harvest basis?
b. What is your opening basis for a storage hedge?
c. How much basis improvement do you expect during storage?
d. What is your expected return per bushel from storing until the end of March using a storage hedge?
View less »