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Ontario's middle east | Here is H/K. Note I post showing them upside down from most people. Positive is carry. I'm not a price trader so my interest is limited to how the spread adjusts basis ownership. I have said many times beans don't pay enough carry to hold them so make them go away when export markets want them (pre SA harvest). See Vail's comment below that basis fades in your part of the world by 30-40c going forward. How are you going to manage holding hedged inventory in that environment? Inversions are meant to be sold. I really see little evidence that spread action is very predictive. Reactive? Definitely, when your fund boys roll into town they work in the front months where the liquidity is. If getting long, they drive up the front month and hence the name bull spreading. When "they're leaving" they punish the front end and bear spread it(build carry). However that does not happen in a vacuum. There are lots of other players who simply try to profit from those moves and there are basis traders who want hedges placed where they think they will make cash transactions. Lots of moving parts but the effects of movement in the cash market are certainly noted at times.Right now we are likely seeing less farmer spot selling physical so exporters are buying futures instead to offset their price risk, this combines to bring H up vs the K.
Edited by Maizeing 1/17/2016 11:03
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Bean spreads for Sat
