Expected improvement − cost of holding
Hypothetical arithmetic only. Improvement is uncertain. Basis may weaken and prices may fall. This is not a forecast.
Carry is only one part of the return.
Carry is only one part of the return.
When a later futures contract trades above a nearby contract, that difference is often called carry. It is a market spread, not a guarantee of what you will earn by storing physical grain.
Count the costs you can miss.
Count the costs you can miss.
Storage charges or on-farm operating costs, interest on grain held, handling, shrink, and quality losses can reduce the benefit of waiting. So can the cash-flow cost of delaying payment.
Three questions for your next decision
What improvement would cover the cost of holding? What is your delivery deadline? How much price and basis risk remains open?
Put a date on the decision.
Compare a sale today with the alternatives available to you. Decide when to review the position again rather than holding indefinitely for a target that no longer fits the farm.
Educational only. Sources: University of Minnesota Center for Farm Financial Management post-harvest marketing plan; MSU Extension Introduction to Grain Marketing.
Next: build a plan before the next move
General education, not personalized trading advice. Futures and options involve substantial risk.