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What Are “Basis Eyes” and Why Are They So Important?

What Are “Basis Eyes” and Why Are They So Important?

There are several different ways to say it, but at the core having basis eyes means

  • eliminating all the distracting clutter,
  • seeing the cash grain world through the lens of basis and spreads,
  • understanding what the market is asking you to do as a grain elevator in any given season, and responding to that appropriately.

Growing your basis eyes puts you on the path to

  • less risk,
  • better margins,
  • being a more valuable service provider to the customers that you buy from and sell to.

How do you grow them?

  • Think in basis terms. This can be a difficult switch if you are newer to basis trading, but from a merchandising standpoint grain has no price once you start hedging. Basis and spreads determine your risk and your margins.
  • Build skills. Understand what a basis chart means, understand what spread structure means, understand the seasonal patterns of basis in your market, and understand how all of this interacts. We have a lot of online resources that can help you with this and our team wants to help with this one-on-one too.
  • Embrace community. A strong base of skills gets you started - interacting with other basis traders is where your skills really start to grow. That is why you'll find an on-going schedule of WCC live meetings throughout the year in many different locations.  We all improve our "basis eyes" when we get together.

Basis eyes separate those who are surviving from those who are thriving in this business. 

Growing your basis eyes makes things more clear and makes grain trading more fun and profitable.

 

How do successful merchant’s describe having “basis eyes”?
View their responses here.

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