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

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

  1. 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.
     
  2. 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.
     
  3. 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.
     
  4. 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