NYMEX vs NYBOT softs

[heech]

Hi,

Just curious *why* NYMEX/Globex cocoa (CJ) is not fungible with NYBOT/ICE cocoa (CC). Both seem to have similar specifications... 10 metric tons of cocoa.

But I've read it repeatedly that the two are not fungible... I realize NYBOT is physical settled while NYMEX is cash-settled, but I'm not sure I understand exactly how that affects prices, especially for those of us who never hold to settlement anyways.

Thanks in advance.

 

[henderson]

they must be substitutable to be fungible.


If you are long for instance ICE WTI crude contract and short NYMEX WTI Crude for 2 cents of edge until settlement you get 2 cents/bbl on cash and must deliver 1,000 barrels of crude per contract plus FOB at Cushing, OK. You HAVE a position.

This is opposed to if you sold a Nikkei (Yen) contract on the CME at X and then bought a Nikkei contract on the Singapore exchange at Y...you're gain/loss is the difference provided they are still mutually offsetting (MOS) aka you have NO position. I am not sure if these 2 exchanges are still MOS; its been a few years so check to see if you are interested.