Discussion in 'Commodity Futures' started by Econmajor, Jul 23, 2008.
Where can you look to find the storage and carry costs of the grains?
i believe it varies depending upon locale and interest rates at the time.
r u thinking of taking delivery?
if you are looking at spreads i've heard some argue the normal spread for 30 days in beans, corn, wheat should be around 7 cents. so for example a sep - dec wheat spread at full carry would be in the range of 21 cents.
I defer however to those more informed on the cash side.
I'm just watching the grains and it seems like a lot of the spreads have hit a floor and i'm just wondering if they are trading near full carry. I can't find anything on the web that states what the carry is.
i think if you stick to 7 cents a month that is the usual average. Spreads can go inverted in an unlimited amount but playing them to full carry can be a consistent strategy.
Last year i had a nice trade playing march may beans to full carry while selling options against them to collect the theta as well.
Consult your board of trade terms for storage costs. But here's a primer.
Delivery house storage is 4.5 cts per bu per month.
Corn @ 5.00 x 5% interest equates to roughly 2 cts per bu per mo.
So you're looking 6.5 cts per bu/per month carry charge right now.
To calculate full carry on a local level, call the grain elevator and ask for their storage rate per bu per month. Then figure you're interest rate per month. Add the two together. = full carry.
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