Basis Trading is a strategy used by elevators (and some farmers) looking to take advantage of favorable basis prices by exploiting the difference between the cash and futures. Grain elevators buy and sell grain all year around. When elevators make commitments to buy corn from farmers on the local market, elevators will also sell futures close to the cash delivery date to hedge themselves.
Basis Trading
The Basics of Grain Basis Trading
Grain Basis Trading is a very effective strategy for both Elevators and Farmers with on farm storage.