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Ontario's middle east | Spread management is essential to basis trade. Sometimes you can just let it happen, take the roll and be fine. Sometimes you will get your donkey handed to you. Last years corn could have had at least a 28 cent carry set in June 2012 and it inverted in July. You have a lot more options with the spread set because you can unwind the spread, put the money in your pocket and sell the corn anytime you want. Look at the flat red line on last years chart. Basis improvement didn't pay the cost of carry to hold it. Inverted markets want you to have air in your bin. I'll say it again, NEVER LET THE FEAR OF EMPTY SPACE LET YOU DO STUPID THINGS. - Pete Rufenach | |
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Maizing
