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Friend or Foe: Marketing Example, Tidbits & Rain Days Update 1/15/24

Friend or Foe: Marketing Example


A farmer produced 200,000 bu of corn in 2023.


Then he delivered 100,000 bushels of cash corn in September, he sold it on Sept 29th at $5.07, with a +30¢ basis.

 

He transferred $35,000 of his new crop corn income to his futures account.

 

Bought 100,000 bushels of December 2023 corn futures at $4.77 on the open (opening of trading day) on Oct. 2nd. 

 

On October 19th, Dec corn traded above $5.00 for the first time in two months. With $5.00 being major technical resistance, he sold his 100,000 bushels of futures position at $4.99. His futures profit was 21¢ a bushel on 100,000.

 

The next day, Dec corn traded to $5.09 and he sold 100,000 bushels of Dec corn at $5.08½. The next day he offset (bought back) his short (already sold the previous day) futures position at $4.95, netting him about 13¢ per bushel of profit.

 

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