Latitude, jsut want to clear one thing up. Think I got a little mixed up here. Nymex is cash settled, ICE and LIFFE are physical delivery. Nymex is pretty thin so I should start with looking at the ICE/LIFFE spread, From what I can see they both accept a similar product. Apart from the currency, what other factors might cause the difference in prices? Transportation, Local Supply/Demand Thats all I could think of. Is there any way to calculate the transportation cost factored in? Am I at least on the right track with this? Or way off? Thanks,
The fundamentals of every market vary. Some things to consider would be weather, seasonality (is one predominatly grown in southern himsphere vs northern hemisphere and how does this equate with storage costs), tax and tariffs on trade, workers' strikes, supply disturbances, I could go on and on. In general, storage and transportation are what go into the model. But i recommend researching fundamentals specific to your market - USDA should have some data and point you to more resources.
Latitude, once again I was probably looking at this a little too simply. I just compared where it is possibly accepted from as per the contract guidelines, not where it would actually come from. Thanks again, very informative.