Ridgway, IL | GOMSK - 10/25/2017 17:28
Until they start getting demanded, they come back with $1 and the owner just goes naw I’ll take the $1 and not retender the deliveries.
Until someone proves they want them, the longs will continue to be forced out at a lower position.
I think they only come back to the man who made delivery if he reclaims them.
If a man makes delivery, that certificate representing those cattle is assigned to the oldest long position, or a long position that puts out a notice of demand.
If no long has issued a demand notice, the delivery is assigned to the oldest long.
If the first stopper doesn’t want to keep them, he retenders them and pays the 1$/cwt
If the original maker of delivery doesn’t reclaim, they’re assigned to the next oldest long position.
They can only be retendered 2x then the 3rd long position is stuck with them.
The purpose of all this, is to make cash and futures converge. This is what is driving your spreads wider. For the life of me, I don’t know why a stopper wouldn’t just stop the delivery, sell dec futures and keep them on feed. 6.5 carry for 36 days is sick money. 5.70 dec to Feb. Flat price keeps going up but the cash market and spreads tell you we got too many.
I’m just trying to figure out when it makes sense to roll dec hedges to Feb? 5.70 is sure tempting but I feel like we are going to be feeling this supply side pressure for a while now. I think dec/mar got as wide as 8$ in 2015, at least I think that’s what I remember???
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explain cattle delivered to cme at West Point,Neb
