| Conan the Farmer - 9/6/2017 20:53
I will admit, I don't buy defered months, I buy the front and roll.
If you bought the deferred (in the context of this discussion that would mean buying say March or May or later when you were selling Dec across the scale), you would be locking in one or more rolls worth of carry and you would have to outrun that with an even larger rally. The only way to beat the carry is by doing what you have apparently done successfully for the most part which is to wait until the deferred month drops to where you sold the front month across the scale. I just know if I tried that I would have the futures take off on an unexpected rally and I would never catch it.
Conan the Farmer - 9/6/2017 20:53
I like to exit around contract expiration and buy back in after it rolls down. It is kind of a difficult game of chutes and ladders. But most all of the months fill their roll gaps and ascending structure appears on the continuous even though it might not on the contract charts. That was definitely the case this year. A lot of contract charts, like May and July, were stagnant and sideways, but the continuous was ascending.
You are right though. I rolled out of March and straight to July and that was god awful stagnant. I blame myself for buying the carry of May. I gave up a whole month and about 15c or so.
I appreciate the comments about buying the carry, that is important and much better explained than my post! There are still issues with buying the front months as well anyhow. Bin space would be preferable.
It's impressive that you have done that. I'll have to study what you have done some. Interesting thread! |
If you hedged next years crop, should that make an impact on what you actually grow?
