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| The commercial hedger will target "storage carry" as the place to finish rolling the bulk of his hedges. If one reviews the math for the last few years, the market will struggle to get past storage carry. Risk begins to out way the reward. Also, with the cheaper interest rates...the cost of funds side of the equation has added no real value.
Big deliveries early in the delivery period with no stopper will push the spread past storage carry until a stopper is found.
So for storage carry 2 months X 5 cents per month =.10/.1471= 68% | |
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