About This Course

• Introduction

  When most people think of a commercial grain elevator their thoughts typically turn to the physical handling or storing of grain.  While handling grain is what all those huge bins are for, what is not widely known is that getting paid to handle bushels is not how the elevator makes its money. The real profits come from TRADING the bushels.   

  But, even here, the numbers will surprise you.  Consider this example:

  • Last harvest an elevator bought corn from area farmers at $4.00/bushel.   
  • A few months later it sold the bushels to a local feedlot for $3.00.  
  • When all was said and done, the elevator made 50 cents a bushel!!!

  You’re probably thinking . . . no way!  Those numbers don’t add up.  But, to a grain trader this scenario makes perfect sense . . . and by the time you are done with this course you will understand how this is possible.  

  It starts by introducing you to a different way of valuing grain.   Instead of thinking in terms of a price, we’re going to shift the focus and show you how elevators trade grain another way . . . in terms called BASIS. 

  Trading BASIS puts the elevator in the favorable position of being able to generate profitable margins without a preference for what price it buys and sells the bushels.  Being indifferent to price in turn enables the elevator to serve the marketing needs of both sets of customers . . . buyers and sellers . . . with everyone’s best interest in mind.

  In this course you will learn how to utilize the key components of the basis trade -- buy basis, sell basis and spreads -- to create these win-win opportunities for your local ag community.

• Module 1

  • The Language of Basis

  • The Basis Decision Comes First

  • How Is Basis Decided?

  • The Broad Reach of the Basis

  • With Change Comes Opportunity

• Module 2

  • Turning Basis Into Money

  • Principles of Hedging

  • Executing the Basis Trade

  • Practice I

  • Practice II

  • Practice III & IV

• Module 3

  • Spanning Time with Spreads

  • Practice - Spreads

  • Spread Mechanics

  • Practice - Spread Adjustments

  • Cost-of-Carry

  • Practice - Making a Basis Trade

  • 3 Tools of Basis Trading