Carry trade for grains
A forward premium only creates a storage opportunity when it covers finance, storage, insurance, handling and the risks of holding the physical grain.
Read about storability and forward pricesEditable book example
Does the curve pay the carry?
Build the full-carry ceiling from storage, finance and other monthly costs, then compare it with the observed forward curve.
Can the forward premium cover full carry?
- Full-carry price
- 224.00
- Difference
- -7.60
- Forward premium
- 16.40
- Less storage
- −12.00
- Less finance
- −6.00
- Less handling
- −6.00
- Net carry
- -7.60
Full curveReview or edit all seven monthsThe month tester above is enough to complete the challenge.
| Months ahead | Observed forward | Full carry | Difference |
|---|---|---|---|
| 200.00 | 0.00 | ||
| 204.00 | -0.40 | ||
| 208.00 | -0.80 | ||
| 212.00 | -1.80 | ||
| 216.00 | -3.20 | ||
| 220.00 | -5.20 | ||
| 224.00 | -7.60 |
Answer explainedWhy does the result move?Open or close the model FAQ
Contango means the forward value is above spot; it does not automatically mean storage is profitable. The entered forward curve is a current price relationship, not a prediction of future spot. Finance is simplified as a linear charge on the spot value.
Full carry = spot + finance + storage + insurance and handling