Maybe I shouldn't comment on ethanol: I don't much of anything about the physical market, don't know any traders or producers or end-users. I don't know how California regulations affect demand for 2011 and beyond. Don't know what blender credit legislation may or may not be passed before year-end.
A market that is tight enough to be in backwardation for months doesn't seem likely to be the same market that is priced so that producers lose money and shut down. Yet I think that is what we are seeing with October contracts still trading at a premium to the rest of the calendar, while simultaneously the December contract is at the cheapest levels seen in years vs Dec corn.
I'm losing money on this trade, but I still like it.
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