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Red River Valley | I take you HTA'd the May or July contract when you wrote your HTA the example of why you would roll using the current spread set up from Dec. to July is
currently Dec. 16 is trading at $3.85 per bushel and July 17 is at $4.00 which would give you a .15 carry to July If you HTA it in the July to day you will earn that .15 from your bins minus any interest you pay on the value of the sale from Dec to July.
but if you hedge it into the Dec.16 time frame today it is a high probability that the carry from Dec. to July is likely to build to around .26-.28 at some point in the marketing year before harvest giving you and additional .11 to .13 cents in carry by waiting to roll to the out months.
the market will pay for the unknown while production is at risk but once production is past the risk stage it then concentrates its efforts to paying somebody to carry the grain until it is needed and generally the market never needs grain in Dec. so it increase's the money in the out months until somebody is willing to store it until then. | |
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I'm about as marketing basic as you get...
