Markets Beginning 2015

[Hopperbin]

Holy crap my 0 jan basis is now worth 10.52 per bushel.

[Hopperbin]

Charlie can you explain why one grain company can leave jan basis contracts open till jan 20. While other companies make you set futures price by dec 15 for a jan contract.

[ado089]

Stormin, what I did is what charlie is talking about. I did the basis contract for nearby a $12 under, July basis is also $12 under. There is almost a $10 spread from the March futures to the July. So by immediately rolling I improved my basis by $10 and get to stay in the market until June. There is a bigger spread to Nov but there are way too many unknowns for my taste to swallow that big of an inversion.

[ado089]

The roll to new crop also comes with $30 basis hit so you loose more than you gain.

[charliep]

Actually I can't. Every company runs their pricing differently based on their business needs and risk management strategy. You have to be aware of what the companies policy is and live it with once you sign the contract.

[Hopperbin]

Ado you may well have done very well. One point is you forgot the 3 dollar per ton charge to roll. What is your cost for rolling two futures months?where do you find a grain company with basis the same in those months?

[ado089]

Hopper, it was Clavet. It's -$2.50 basis picked up. I think because I did it all at the same time they don't charge for the roll.

[crusher]

Ado that seems like a good strategy. In my backyard we have a wider basis for spot and narrow further out so the execution wont work here. I would suggest you sell the cash and buy back the July. You get your money now. If you don't have a futures account - get one. Just for this trade it would be easy to get your feet wet.

[Hopperbin]

Ado I believe what you did was a cheap roll. Target price agreement without the paper work. Basically the only contract was the one you signed for 7:50 over july. No fee for that. Interresting very.

[Hopperbin]

I mean not a roll at all.

[ado089]

Crusher I like that idea too but my trading account is a shit show right now that needs to be cleaned up before I can do anything with it. I have a bad habit of turning into a speculator during slow times. If I was smart I would use my freshly minted $10 to buy puts on these tonnes.

[farming101]

Yes, buying a put would limit the risk that the futures price for July tanks.