Corn, Soybean Backwardation Narrowing

The annualized roll profit (negative = profit) has come in dramatically in the last week.
From the Contango Report:

Rains have prompted increased bean quality, but there's still volatility in soybeans.

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CONTANGO WATCH: As we rolled into September contracts, soybeans' steep backwardation has plunged back down to Earth.

Credit for the sharp drop is mostly due to the weather. Rains across the Midwest have increased estimates for the U.S. fall crop. The USDA Crop Progress Report shows that the recent rains have prompted a huge boom in bean quality compared with last year. Excellent-quality beans are up 10 percent and good-quality ones are up 24 percent, while poor-quality beans are down to 6 percent compared with last year's 22 percent.

Overall, the grain complex has not had the best summer, seeing multiyear lows in July, prompting HAI's Sumit Roy to urge investors against long bets.

As ever, China's narrow capacity for row crops keeps them a key player in the market....MORE

The roll profit on corn has also shrunk but not nearly as much:

Corn

Current Annualized Cost
-9.90%
Annualized Cost 1 Week Previous
-12.39%
Historical 08/02 5YR Annualized Roll
4.20%
Contract Months:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

CONTANGO WATCH: Corn continues to narrow its backwardation, this week by almost 2.50 percent, which may be a herald of things to come as we move closer to winter contango.

ROLL COSTS: Investors net 9.90 percent annualized to roll front-month corn contracts, down from a net of 12.39 percent.

BOTTOM LINE: Backwardation

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