September corn futures are currently trading at $3.80 a bushel while the spot price of corn is $3.65 a bushel, so the "basis" (the futures price minus the spot price) is $0.15 a bushel. If you expect the basis to weaken (i.e., to fall) significantly in the next few days, you can speculate on your view by

Question

Quizplus · Accepted Answer

Going long spot corn and short September futures is the best choice in this scenario because if the basis weakens as expected, the spot price of corn would go down while the futures price remains the same, resulting in a profit. Going long the September futures contract (A) would only be profitable if the price of corn goes up, regardless of the basis. Going long spot corn (B) would not account for the potential change in basis and could lose money if the basis weakens. Going long September futures and short spot corn (D) would result in a loss if the basis weakens as expected because the short position in spot corn would lose value while the long position in futures remains the same.

September Corn Futures Are Currently Trading at $3