- We can read real what a market has to say about its real supply and demand situation any time of the day, any day of the week, by looking at futures spreads.
- In the grain and oilseed sector we can run those spreads through the filter of full carry costs, taking into account storage and interest.
- When we add in basis, the difference between cash price and futures price, the fundamental picture becomes even clearer.
Ok class. It’s time to take out your notebooks as we once again talk Grain and Oilseed Fundamentals 101. I’m starting to feel like a burned-out teacher who has taught the same lesson for 30 years, most of it seemingly falling on preoccupied ears. But rather than earbuds playing whatever the latest music craze is during lessons, the noise I’m competing with is the same as it has always been: USDA, NASS, and Crop Tours. Frankly, it doesn’t matter how many times I teach this course the next comment is always, “Yeah, but did you see NASS’ latest weekly crop condition numbers?!” I’ve talked about the Browning Effect of those nonsensical numbers before, so there’s no point in debating it here. I’ve also mentioned some of the ulterior motives behind USDA’s monthly supply and demand tables, but again, they are taken as gospel by everyone but actual traders. As for crop tours, well, let’s just say I got a media company kicked out of those in the past and I’ll leave it there.
