So corn has this normal contango going on up until July 2017, then it gaps down 10% to Dec 2017, then resumes the normal amount of contango. Is there any rational explanation of that kink in the curve? I don't see any annual pattern in corn spot prices, or any jump down for Dec 2016. I'm long term bullish on corn anyway so I just bought a bunch of the Dec 2017s instead of the front month.
Corn futures curve kink
- Thread starter ScroogeMcDuck
- Start date
You are trading corn, but you know nothing about grain markets basics.
Old crop, new crop is the old old story.
Yeah obviously it's a new crop but there's no reason to expect the spot price will actually decline in 2017. I see the same irrational thing going on in gold futures -- 0.4% drop from Aug 2017 to Dec 2017 while every other month has contango.
No reason ?
Commodities markets tend to revert to the mean/marginal cost etc.
That's why, when oil is cheap, long term oil is more expensive.
And when corn is expensive, long term corn is cheaper (DEC17).
Commodities markets tend to revert to the mean/marginal cost etc.
That's why, when oil is cheap, long term oil is more expensive.
And when corn is expensive, long term corn is cheaper (DEC17).