Let’s talk about spreads for a moment – Carry Spreads, Flat Spreads, and Inverted Spreads. It’s no secret that spreads play a big role in how successful a grain merchant is each year. However, while they play a role in success, spreads shouldn’t determine IF a merchant is successful or not.
The prevailing wisdom and accepted consensus of those in the grain business and associated with the grain business is that elevators only make money in years where there is carry in the market. Though it is true that elevators can and do make money in carry markets, it is a myth to believe they can’t make margins in years of flat or inverted markets. In fact, many of our White Commercial customers have had the most profitable years in their history over the last couple of years with no carry in the market. I could give you a pretty extensive list of very successful grain merchandisers that have become so skilled at trading in flat and inverted markets that they would tell you they would prefer those markets over carry markets each year!