July / Dec Corn
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Started by beaners - June 23, 2022, 12:43 p.m.

Wow this spread is really moving..

now +93 to the July...

Scraping the top of the screen...

is this sustainable?

July going off the books shortly - wondering how much premium is too much.

Hope all are well!!!

By metmike - June 23, 2022, 12:54 p.m.
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Great point beaners and wonderful to read you here!

The old crop supply has dried up(been used up)  and its almost impossible to get so cash prices/bids have been extremely strong.

The expiring front month, gradually gets pulled towards the cash price, while the speculators can continue to dominate with the new crop, December price.

Weather models have turned more bearish this week, especially the last 24 hours, which affects the new crop Dec. the most and speculators are selling hard.

July is maintaining more value. As you know, when we have such a big inverse, it's reflective of a major bullish supply situation.

Normally, back months are higher priced and that price premium shrinks as we approach expiration. When the front month is much higher priced.......you usually have a big shortage of supply for that commodity. 

The front month will best reflect the actual cash/current market situation RIGHT NOW, especially close to expiration.

Back months dial in EXPECTATIONS for the future based on speculation. Back months also dial in the "carry" cost which is the cost of things like storage of the crop that will be sold in that future month.  The farther out it is, the more carry is dialed into the price.

All things being equal(which they never are) a distant/future contract would gradually trade lower in price as the carry premium slowly erodes........eventually converging pretty close to the cash market price at expiration.

When a futures contract expires, those that stay in are subject to delivery of the actual product if they are long or to come up with the amount they were short in the cash market to a buyer of the same quantity.

Understanding Expiration And Futures Contracts Months


By metmike - June 23, 2022, 1:17 p.m.
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By beaners - June 23, 2022, 1:40 p.m.
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awesome reply met mike!

So glad to see you running the show here still..

Yes, just popped back onto a small trading account for the summer - seemed like some great action in the grains to play around in...

I think +95 is where I think the market holds....just based on the techs I see..


Cheers and best to you!

By TimNew - June 23, 2022, 2:15 p.m.
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Wow Beaners!!!     Great to see ya. :-)

By metmike - June 29, 2022, 2:16 p.m.
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+120 for the July/Dec. 

How about that one!

By tjc - June 29, 2022, 3:49 p.m.
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  Not to be outdone by corn, look at ON v. OU or OZ.  Premium 1.50 or so

By metmike - July 1, 2022, 1:04 p.m.
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CN/CZ +145 right now.  Must be a record by a very wide margin(been slightly higher at times today)

CU/CN is +8. Could be a case for that spread to open up more after CN expires shortly,  if CZ gets more good weather forecasts.

By metmike - July 3, 2022, 2:26 p.m.
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July 1: CBOT December #corn drops 2% and finishes at $6.07-1/2 per bushel after hitting the lowest mark since March 1. Corn settled at $5.89 exactly a year ago today.