Formerly NE North Dakota, now NW MN | That is a very tough call because in the MWE is thinly traded and if the boat gets too full to one side (to many HTAs with no basis fixed) it's common to see the the front month get bid hard (which will cause the front month to invert, or be priced higher, than the next month) while the cash basis collapses. So basically, holding an HTA in that situation you end up with an ugly basis, and an even uglier roll. Because of that, I'm a bit paranoid and pretty much as soon as my HTAs are on the front month I like to decide if their going to get the basis priced or get rolled.
Basis fundamentals for MWE area geographically are....shall we say.... murky? If the one place is always .20 worse, i'd maybe lean away from them, but if they're only .20 worse right now (maybe they are a shuttle loader- loaders are struggling right now because we have no exports. Theoretically, exports could pick up and their bids would improve......) it might be worth having the roll option. In my experience .02 cost to roll is pretty low. I think .04 or .05 would be a fair guess at an industry standard, but maybe I'm way off on that. |
I'm about as marketing basic as you get...
