why is there a huge price difference between future price and cash price?

Discussion in 'Commodity Futures' started by number22, Dec 15, 2008.

  1. number22

    number22

    I had lunch with a friend who just bought load of soybean at cash price around $11 per pound. And I told him it only trade around $9 for Dec. future contracts.

    We want to know how to take delivery on next contracts(March). He only need 1 contracts every 3 months.
     
    #1     Dec 15, 2008
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  2. traderTX

    traderTX

    various things...basis, your purchase points' "in and out" fee (what they sell the grain for over the amount they buy it for), etc.

    For instance in my area (Texas Panhandle):

    March Corn: 375.00, Avg Basis: +.10 = 3.85 per bushel. Elevator avg "in and out" fee: $.50 = cost for me to purchase: 4.35 per bushel

    BTW...there is no Dec. Bean contract...you mean Jan.
     
    #2     Dec 15, 2008
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  3. number22

    number22

    Thanks for reply, I think he paid for Nov price and taking delivery in Dec. I was mistaking his price with Jan. contract.

    Anyway, the future price is still lower than cash price on soybean, about $2 per bushel.
     
    #3     Dec 17, 2008
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  4. number22

    number22

    I missed out this opportunity, recent price hike almost match up with cash price.

    I hope someone benefit with this thread. if you do; please let us know. After all; reading ET can be some benefit.:D
     
    #4     Jan 12, 2009
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