NYMEX vs NYBOT softs

Discussion in 'Ag Futures' started by heech, Jun 24, 2009.

  1. heech



    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.
  2. 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.