Friday, March 28, 2008

Two prices in crop markets


A recent NY Times article highlights that future prices in crop markets have been selling significantly higher than the cash price. Typically economists would say that is impossible because traders could earn free cash buying crops at the cash price and selling them at the future price.

This would earn RISK FREE CASH for the trader, and the price differences would soon disappear. This isn't happening. Nobody knows why?. As far as I can figure, this is an investment tip if there ever was one. If any of you end up getting rich buy selling future contracts remember who gave you the information.

1 comment:

Tiger Coach said...

These are some darn interesting comments. I am quite interested to see you angle on the President's new "vision" of the FED's role in economics. Would these be a case of the fox watching the hen house?

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We have many similar sentiments about the markets.