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There’s a profit potential in storage
Market observer Matt Roberts says there’s a profit to be made on the large corn crop if the right infrastructure is in place. Roberts, founder of the private consulting firm The Kernmantle Group, says money can be made on this year’s high yielding crop through carries and basis appreciation.
“In other words, storage, doing the things that made ADM, Bunge, Cargill their fortunes in the first place centuries ago, which is grain storage,” Roberts told Brownfield Ag News, “making sure that a crop that is produced one month of the year is available for consumption 12 months of the year.”
Roberts, formerly an agriculture economist at Ohio State University, says the key to profiting from the large crop is understanding how basis and carries work in the futures market.
“Done properly, you can increase your returns on average five to six cents a month, while reducing your risk by about 80 percent versus just putting your grain into storage,” said Roberts.
Barring trade policy shake-ups, Roberts tells Brownfield he expects to see corn exports pick up from where they currently are after near-term sideways trade. He spoke to Brownfield at the South Dakota Farm Bureau Federation Centennial Convention in Sioux Falls.
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