Common reading mistakes
Three errors show up constantly. First, comparing a cash bid today to a futures price from a different contract month; always match the months. Second, celebrating a higher bid that came entirely from a futures rally while basis quietly slipped; track the basis, not the bid. Third, ignoring the fine print. Drying charges, shrink factors, moisture discounts, and storage start dates differ between buyers and can move the net price several cents either way. A bid that is five cents higher on the board can be lower in the bank after fees. Ask each buyer for their full discount schedule once a year and keep it on file.
Anatomy of a bid
Every cash bid references a futures month, whether the buyer states it or not. Harvest bids typically reference the nearby new crop month, December for corn and November for soybeans. Bids for later delivery reference the month matching that delivery window. Always ask which month a bid is tied to before comparing it to anything.
The basis is the tell. A bid that looks higher than a neighbor's may just reflect a futures rally, not a better buyer. Subtract the futures price from each bid and compare the basis numbers instead. The buyer with the strongest basis for your delivery window is the one actually paying more.
Reading the signals
- Strengthening basis. Buyers are short of grain or demand is hot. Often a sign to move bushels or lock basis.
- Weakening basis. Supplies are comfortable. Common at harvest and after big farmer-selling flurries.
- Differentials by delivery period. Bids for January or spring delivery that beat harvest bids by more than your storage costs are the market paying you to hold grain.
- Spot or free bids. Occasionally a buyer posts a short-lived premium for immediate delivery. These are worth acting on when they exceed your targets.
Build a simple routine
Check futures and two or three local bids daily, or have someone do it for you. Record basis weekly so you learn its seasonal pattern at your locations. Over a few years, that record becomes a genuine edge: you will know when a bid is good for your area instead of guessing. CCS trade alerts and broker-assisted accounts exist partly to keep clients from having to watch the screen all day themselves.