Soyoil Near M > Far M, Corn Near M < Far M. WHY?

Discussion in 'Ag Futures' started by qll, Nov 19, 2006.

  1. qll

    qll

    Both Soyoil and Corn are in bull market, but the monthly contracts act differently.

    For example, in my market, Dec06 Soyoil is 100 points higher than May07 soyoil. Dec06 contracts are getting fewer and fewer. So I assume the Short are covering Dec06 so they push the month higher. In Corn, Sep07 is 100 points higher than May07. Sep07 contract numbers are increasing at higher than May07 speed, so I assume people bet a long bull market in 2007.

    Did I miss something? Please add here. Thanks.

    (I trade in Dalian Ag Market.)
     
  2. (1) Soybean oil is exhibiting a carrying charge structure in its contract months. The DEC-06 open interest is being rolled-forward into other contract months. Longs AND shorts are getting out. (2) Corn is exhibiting a normal carrying charge structure in the new-crop 2007 contract months. September is known as a "swing month". In a bull market, September tends to be priced lower than July but higher than December. Harvest pressure is expected to be heavier on December compared to September. That's primarily why the Sep is at a premium to the Dec.