|
| VSR is all about convergence.....It was the solution to the SRWW wheat basis being at big unders 2009ish as I recall. I found it interesting that for C and B CME has chosen to stick with the fixed rate. I believe this was for simplicity sake of doing the math at the farm gate and the size and scope of production vs wheat.
C and B basis levels had been more stable and in the opinion of the regulator (CFTC) were not stuffing from the same lack of convergence. Not the case with current bean basis but believe most believe this is a "one off" market.
I don't believe wider carries are a consequence of the VSR mindset. I do not believe the market gets to storage carry for the balance of 2018 crop marketing year.....Gotta get that basis puke feeling for that to happen....I've been watching CN/CU inverse of 2020 and wondered what the market was saying and if that mindset was throwing out a cautious signal to spread thinkers.
Adding: I do think that once grain is in space and one commodity has the ability to increase space returns through the VSR equation, the other commodities do have to compete for that space and would accomplish that through widening spreads.
Edited by Rod@night 2/12/2019 06:25
| |
|