HardAssetsInvestor

August 27, 2012

Contango Report: Corn Curve Stays Flat Near Record High Until Sept. 2013, WTI Contango Narrows

Details

Corn prices are anticipated to stay near record highs for the next year, according to the forward curve.

Featured Commodity

CONTANGO WATCH: Corn is in contango at the front end of the curve, but relative to recent volatility, annualized costs are quite modest. The next five contract months for corn are near $8/bushel, close to record levels.

Not until September 2013 do corn prices drop meaningfully—around the time of next season’s harvest. Of course, this season’s harvest is expected to be disappointing, after adverse weather decimated the crop. That will likely keep supplies tight for the next year.

ROLL COSTS: It costs investors 3.14 percent annualized to roll front-month corn contracts.

BOTTOM LINE: Mild Contango to Backwardation


Has oil moved into backwardation yet? What does corn’s roll yield look like? How do you know when it’s time to buy—or sell?

Each week, we investigate the futures curves of the most important commodities in the U.S., helping investors better understand the market and seize buy-and-sell opportunities as soon as they arise. For an easy-to-understand explanation of contango, backwardation and roll yields, please click here to go to our Hard Assets University.

To see current contango curve and front-month roll costs for each of our selected commodities, please select a sector or commodity below (or read the whole report ):

Data as of close on August 24, 2012
Data courtesy IndexUniverse.com