Futures & basis risk desk · Grain handling & elevators
Hedge square, basis tracked, margin funded on time.
The elevator buys cash long and sells futures short to lock margin in the basis. But basis moves against the book, and margin calls hit overnight on rallies.
The reality
The margin lives in the basis, not the flat price.
The short futures hedge takes flat-price risk off the cash grain, but it does not remove basis risk — the cash-minus-futures spread the elevator actually earns. Buy basis on the way in and sell basis on the way out are where the merchandising margin is made or lost, so the basis on every open position has to be tracked, not just the futures price.
The operator owns the position: it marks buy and sell basis against the open hedge, monitors margin and equity at the FCM, initiates the wire on a call, and reconciles the futures position back to physical long and short daily.
How the operator runs futures & basis risk desk
Basis book · Track
tracking- Cash and futures pulled
- Buy basis marked vs hedge
- Sell basis vs target — checking
01Track the basis on the book
Marks buy basis and sell basis against the open short hedge and flags where the merchandising margin is widening or narrowing.
FCM acct · Margin
funding- Variation margin marked
- Call amount verified vs equity
- Wire to FCM — initiating
02Monitor margin and fund the call
Watches the FCM account for margin calls when futures rally against the short, verifies equity, and initiates the wire to fund the call before the deadline.
Position book · Reconcile
reconciling- Physical long/short totalled
- Futures position pulled
- Position vs inventory — matching
03Reconcile the position
Matches the futures position to physical long and short and updates the position report against inventory daily.
The outcome
60% of position management work off the team
Hedge positions matched to inventory at all times, with basis tracked on every open lot.
- Buy and sell basis tracked on the open hedge, not just the flat price
- Margin calls funded before the deadline, not discovered late
- Futures position reconciled to physical long and short daily
- Unhedged exposure surfaced the moment a position drifts
Common questions
Futures & basis risk desk
- What does the Futures & basis risk desk operator do?
- The operator owns the position: it marks buy and sell basis against the open hedge, monitors margin and equity at the FCM, initiates the wire on a call, and reconciles the futures position back to physical long and short daily.
- What impact does the Futures & basis risk desk operator have?
- 60% of position management work off the team. Hedge positions matched to inventory at all times, with basis tracked on every open lot.
- How does the Futures & basis risk desk operator work?
- Marks buy basis and sell basis against the open short hedge and flags where the merchandising margin is widening or narrowing. Watches the FCM account for margin calls when futures rally against the short, verifies equity, and initiates the wire to fund the call before the deadline. Matches the futures position to physical long and short and updates the position report against inventory daily.
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