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SC Iowa | The Dec 17 corn futures contract closed at 3.87, which is 39 cents higher than the current Dec 16 contract (3.48)
We've just gone through a couple of years where that spread narrowed substantially, either during harvest or just after harvest ended....and although we have a big crop to work through, we have very strong demand in both the domestic and export markets this year....
so the thinking goes "I don't know if or how much wider these spreads might get, but I would be willing to lock up that 39 cent board carry on some bushels today"......
just because you have the corn hedged in the Z17 does not stop you from selling a strong front end basis and lift the hedge
so what is the "best case" scenario??? You hedge the corn and the spread comes in 20 cents or more and move the corn on a strong basis on the front end
the worst case is that the spread never collapses and the spreads to the deferred months stays steady or widens over time...
thanks.....I will be on KWMT next Tuesday during their noon show..
Ray J | |
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Question for Ray J about the carry
