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South Central Iowa | Yeah, no problem Fry.
I know why it is tempting when you look at it. I got a book called "The Art of Grain Merchandising" a couple of years ago to learn more about elevators and how merchandisers do their work to better understanding marketing and basis. When you get in the middle of that book, you start to think that you could make enormous amounts of money trading that old to new. It seems like it is so easy. Of course August shouldn't trade a $.72 cent premium to November. You almost start harvest by that point. But like Insider said below, inversions can grow endlessly, carries have limits. And the natural state of the tail end of old to new is an inversion, because why would I sell my beans in August if I will get another 30 cents in a month? So you should naturally see an inversion there and it is unlikely that it will shrink, and what is worse is if we get harvest delay or threat of it, that August and especially September can explode. | |
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Rolling hedges from old crop to new crop.
