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IA | I'd be surprised if there is truly no 'fee' in this with ADM. I would imagine the price to roll includes the spread plus a markup.
Interest cost is something to consider, as the other poster mentioned.
Also, keep in mind that in carry markets, front month price tends to persist, meaning you roll and your basis is 10c cheaper, and July futures will likely try to trend towards May futures over time. This is part of the reason the other poster mentioned that rolling basis contracts can be painful. Your basis gets worse and worse and the futures can stay the same.
On the upside, acres in question, late planting (though looks better for planting today than it did earlier this week), and potential weather volatility all give you opportunities to price.
Just need to evaluate risk - how many bushels of total production does this make up? Are you better off focusing on this portion or do you need to focus on the new crop risk. Even though you have variable production there are still some things you could do. | |
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Looking for help with a Basis contract.
