john risk - wheat price direction?, page-52

Thats fine MM but basis generally always weakens at harvest because large volumes of sales are recorded. Sometimes it completely collapses and can go negative. You can generally always forward sell a percentage of your average production, eg 25% before even planting. You could go into the next year and begin sales as well if you still wanted to be marketing on price rises before production security is assured.

There are non deliverable products such as SWAPS which allows you to swing into the cash market whenever basis is strong, but you need prices to be trading around historic highs to dereisk these instruments.

Below is a chart that shows the severe rainfall deificit that exists in the souther US wheat States. The chart looks ver similar for many central and eastern European producers.