On Carrying Charges, Contango and Confusion: Grain Trading Never Changes
To little interest is paid by the "spec" community to carrying charges, the movement from contango to backwardation and back again, and to the effects of the term structure shifts upon prices generally. Professor Holbrook Working of the Stanford University Food Research Institute championed these important functions decades ago and what he found then is applicable today. We'll look at the importance of the changes in the term structures in the grains and the lessons learned there as they apply in the modern world not just to the grain markets but to energy and other storable commodity futures markets. "Working" works…even nearly a century after his work!