| Table
3. Gross Returns for Storing and Hedging Corn in
1986/87 (all prices are averages). |
| |
March
Futures
|
Cash Market
|
Difference
in Futures/Cash Prices
|
| Harvest |
sell $1.79
|
buy
(store)$1.52
|
$0.27
|
| January |
buy $1.57
|
sell $1.48
|
$0.09
|
| Results |
+ $0.22
|
(-) $0.04
|
+ $0.18
(*BI)
|
| Gross
Returns to Storage $0.22 - $0.04 =$0.18 (The
above table shows a 19-cent return or basis
improvement. The one cent difference is due to
averaging and rounding process.) |
| |
| |
May Futures
|
Cash Market
|
Difference in Futures/Cash
Prices
|
| Harvest |
sell $1.85
|
buy (store)
$1.52
|
$0.33
|
| March |
buy $1.59
|
sell $1.50
|
$0.09
|
| Results |
+ $0.26
|
$0.02
|
$0.24 (*BI)
|
| Gross
Returns to Storage $0.26 - $0.02 = $0.24 |
| |
| |
July
Futures
|
Cash Market
|
Difference
in Futures/Cash Prices
|
| Harvest |
sell $1.87
|
buy (store)
$1.52
|
$0.35
|
| May |
buy $1.91
|
sell $1.85
|
$0.06
|
| Results |
(-) $0.04
|
+ $0.33
|
$0.29 (*BI)
|
| Gross Returns to Storage -$0.04
+ $0.33 = $0.29 |
| *BI = Basis Improvement |