Date of Graduation


Document Type


Degree Name

Master of Science in Agricultural Economics (MS)

Degree Level



Agricultural Economics and Agribusiness


Andrew McKenzie

Committee Member

Eric Wailes

Second Committee Member

Lanier Nalley


Social sciences, Basis, Futures market, Grain basis trading, Grain storage, Returns to grain storage


This thesis research evaluates post-harvest grain marketing strategies such as basis trading and basis trading with pre-spreads at different cost of carry coverage levels. Although this empirical analysis is done from grain elevators perspective for storing corn and soybeans, these strategies are also applicable to farmers seeking post-harvest period marketing strategies to hedge stored grain. However, considering the volume of grains stored by elevators, and hence the high levels of price risk associated with this business model, the marketing strategies considered in this thesis are most pertinent to grain elevators.

Paired t-test results indicate that corn basis trading at harvest and pre-spreading at 150% cost of carry level at pre-harvest time yield statistically similar mean net returns to post-harvest storage (up to 185 days), whereas other corn pre-spreading levels such as 125% and 100% yield significantly lower mean net returns. In addition, basis trading corn results in lower net returns variance than storing it un-hedged, and hence, a less risky post-harvest strategy.

Results for soybean storage indicate adverse outcomes from basis trading and pre-spreading strategies over long storage periods, as cumulative mean net returns tend to significantly decrease beyond trading day 40 of storage period. Although variances of net returns do not significantly change over the 60 day storage period, they do so after this period, especially when hedged with May and July soybean futures contracts. However, soybean results support the use of pre-spreading100 with more deferred contracts approximately for 40 day storage period, where mean returns are significantly higher than basis trading returns. We highlight outcomes from un-hedged storage and find significantly positive mean net returns beyond 60 days. For grain elevators in North Central Illinois un-hedged soybean storage generated significantly positive and increasing returns over a 60-185 day storage period. Although un-hedged corn storage also yielded positive returns 60% of the time (between storage days 60-175), wide confidence intervals close to zero indicate that, on average, net returns over these days are only marginally significant.