@sdelsad/commodity-desk-daily 1.0.15 → 1.0.17

package/covered.md

@@ -5,3 +5,5 @@ Running log. Read before writing a new episode: avoid repeating material, and on
 - **Ep 1** (Mon) — *The Units and the Language of the Desk*: Units and quoting grammar; three desk dialogues; see glossary. Pulse: Dec corn 4.65, Nov beans 11.82, Sep wheat 6.51; Black Sea lifting wheat; Midwest rain weighing on corn/beans; WASDE Wednesday named with trade expectations 182.4 corn / 52.9 beans.
 - **Ep 2** (Tue) — *What a Merchant Does, and Why Basis Is the Whole Game*: Space/time/form; physical vs paper; hedging kills flat price; basis as residual; asset-light vs heavy mapped to the transformations; ABCD; why a bull market does not enrich a hedged merchant; three surviving risks. Worked example Santos -20 to Shandong +80 = 30c = 660k on 60kt; 1 dollar board move nets zero, 10c basis = 220k. Broker dialogue on line-ups and river levels. Pulse: levels Dec corn 4.65 Nov beans 11.82 Sep wheat 6.51; WASDE tomorrow with 182.4 vs 183 corn yield and the residual-nature-of-ending-stocks explanation; GEOPOLITICS: Black Sea squeeze, 67 strikes on Ukrainian port facilities in July, Novorossiysk and Taman terminals restricted (20+ mt/yr), Port Kavkaz closed, Azov ~25% of Russian exports constrained, yet Platts milling wheat fell to 225.50 on 4 Aug (13-month low), Russian FOB ~224, Ukrainian domestic -30%, war-risk premium 2-3% of hull, freight premiums +40-80%, up to 10 dollars a tonne — used as the bridge into the basis lesson.
 - **Ep 3** (Wed) — *Futures Plumbing and the Shape of the Curve*: Futures plumbing: tickers (ZW ZC ZS ZM ZL, KC SB CT), liquid months, front month, rolling executed as a calendar spread (Sep-Dec fifteen Dec over dialogue), initial vs variation margin, hedge converts price risk into liquidity risk with 2022 European wheat margin-call case; curve as information: carry/contango vs inverse/backwardation, full carry ceiling and cash-and-carry arb, percent of full carry as message, store-or-sell worked example (wheat 6.30, storage 5c, interest 3c, 24c full carry vs 15c spread, elevator vs own-bin answers), inverse as scream punishing storage twice. Vocab: ticker, front month, roll, calendar spread, Dec over, carry market, inverse, full carry, initial margin, variation margin, limit move. Pulse: WASDE print day — trade avg 182.5 corn yield vs USDA 183, range 180-185, first survey-based state-by-state report, trade-the-surprise framing; Tue closes Dec corn 4.6050 (-1.25), Nov beans 11.6875 (-10.75, 5-wk low), Chi Sep wheat 6.3025 (-10.25), KC 6.99, Matif Sep -5.25 EUR; wheat fell on rumours of Russia-Ukraine safe-passage talks in Turkey — priced the un-trapping mechanism (capacity reopens, world price down, origin basis up, freight/war-risk premiums compress); Ukraine 26/27 export forecast cut to 38-40 Mt
+- **Ep 4** (Thu) — *The Physical Chain, End to End*: Incoterms as risk allocation (FOB/CFR/CIF, risk passes at loading, cost vs risk separate, who charters/insures); execution clock laycan-nomination-NOR-laytime-demurrage/despatch; worked example 60kt FOB Santos beans at ~434 USD/t = 26M cargo, 3 days over at 24k/day = 72k vs 660k margin (11%), interest 4.3k/day; statement of facts and cascading demurrage claims; laycan miss = cancellation into a 40c rally; documents: draft survey, certificate final at load, bill of lading as title, backdating = fraud; execution desk as profit centre; OPS/TRADER dialogue on NOR and turn time. Vocab: Incoterms, CFR, CIF, charter party, nomination, NOR, laytime, weather working day, despatch, statement of facts, draft survey, bill of lading, cancelling date. Pulse: WASDE aftermath - corn yield cut to 180.7 (trade 182.5, prior 183), new-crop ending stocks 1.653bn vs 1.79 July, Dec corn +20.25c to 4.8075 two-week high; beans production +44M above July yet Nov +14.5c to 11.8325 on crush +30M (trade whole sheet, not one row); Chi wheat +22.5c to 6.5275, KC +21.5c to 7.2075; GEO escalation: Tue talks rumour died overnight, Ukraine struck Novorossiysk idling Demetra (8.5Mt) + NKHP (7.1Mt) grain terminals ~15.5Mt/yr, Russian Aug exports est 3.0-3.4Mt, Turkey two-corridor proposal, vessels-on-demurrage-clock bridge into lesson
+- **Ep 5** (Fri) — *Wheat: The Map and the Screens*: Wheat classes and specs (SRW ~10 Chicago, HRW 11-12.5 KC, HRS 13.5+ Minneapolis, durum, Black Sea milling 11.5-12.5); protein, test weight and falling number as the real price, low falling number demotes milling to feed at ~40 USD/t. Four exchanges for one grain: Chicago and KC 5000 bu in c/bu, Minneapolis HRS, Matif EU milling 50 t lots in EUR/t delivered Rouen-Dunkirk; tick symmetry 12.50 dollars vs 12.50 euros; 60kt = 440 Chicago lots vs 1200 Matif lots. KC over Chicago 68c/bu = 26 USD/t as the protein spread and an export-bid signal. Black Sea has no futures - daily price assessments, why an assessment cannot be bought sold or hedged. Cross-hedge worked example: 60kt Russian 12.5 FOB at 224 hedged with 1200 Matif lots, Europe +10 EUR/t = -692k against physical +4 USD/t = +240k, net -452k = 7.5 USD/t slippage; cross-hedge protects against the world moving not your own market; correlation highest on quiet days; EUR/USD exposure created by the hedge itself (~13-14m EUR). MILL/SELLER dialogue on protein, falling number, test weight and the 9-dollar spec spread. Pulse: Thu 13 Aug give-back - Dec corn 4.7775 -0.6 percent, Nov beans 11.8175 flat, Chi Sep wheat 6.5125 -0.2 percent, KC Sep 7.2075 Wed settle; China bought new-crop US beans three days running totalling 505,000 t; GEO escalation - Russia struck Izmail on the Danube, Ukraine's fallback after deepwater loadings ~zero since 22 July, Ukrainian early-Aug shipments -76 percent y/y, wheat export forecast 8.3 Mt, USDA cut Russia+Ukraine exports 2.5 Mt, yet Chicago finished the week unchanged because US sales were only 255,900 t (-14 percent w/w) and the US share of world trade was cut to 9.9 from 10.9 percent - flow substitution needs a buyer who actually switches origin, and they call France, Argentina and Australia.

package/ep05.md

@@ -0,0 +1,205 @@
+# Soft Commodity Trading — Ep 5
+## Wheat: The Map and the Screens
+
+---
+
+## Market pulse
+
+**Two ports burned in two nights, and Chicago wheat finished the week exactly where it started.**
+
+| Contract | Thursday 13 Aug | Change |
+|---|---|---|
+| Corn, December | $4.77¾ /bu | −0.6% |
+| Soybeans, November | $11.81¾ /bu | ~unchanged |
+| Wheat, Chicago September | $6.51¼ /bu | −0.2% |
+| Wheat, Kansas City September *(Wed 12 Aug settle)* | $7.20¾ /bu | +21½¢ |
+
+Thursday was a give-back session. Corn handed back part of Wednesday's yield-cut rally on profit-taking; soybeans held, supported by a third consecutive day of announced Chinese new-crop buying — 505,000 t in total across the three days. Wheat consolidated.
+
+```chart
+{"type":"line","mode":"index","unit":"Mon 10 Aug = 100","title":"Four sessions, one round trip",
+ "caption":"Only corn kept the WASDE move. Chicago wheat ended the week where it began, despite two grain ports being hit.",
+ "source":"CME settlements 10-12 Aug 2026 (episode pulses); Reuters quotes 13 Aug 2026",
+ "x":["Mon 10","Tue 11","Wed 12","Thu 13"],
+ "series":[{"name":"Dec corn","values":[465,460.5,480.75,477.75]},
+           {"name":"Nov soybeans","values":[1182,1168.75,1183.25,1181.75]},
+           {"name":"Sep Chicago wheat","values":[651,630.25,652.75,651.25]}]}
+```
+
+**The geopolitical read.** The exchange completed itself overnight: after Wednesday's Ukrainian strike idled two Novorossiysk grain terminals, Russian drones hit **Izmail**, Ukraine's Danube port — the fallback route that had been carrying the trade since deepwater corridor loadings fell to effectively zero on 22 July. Ukrainian shipments in early August were already running 76% below a year earlier; the season's wheat export forecast is 8.3 Mt. USDA cut combined Russian and Ukrainian exports by 2.5 Mt in Wednesday's report.
+
+And Chicago did nothing. That is the useful part. US wheat export sales last week were 255,900 t, down 14% on the week, and USDA now has the US taking **9.9%** of world wheat trade against 10.9% before. Destroyed supply only reaches a price when a buyer switches origin — and when Black Sea wheat goes dark, Egypt, Algeria and Bangladesh call France, Argentina and Australia. Flow substitution is the mechanism, and it does not point at Chicago.
+
+---
+
+### Key takeaways
+
+- **Wheat is a category, not a commodity.** Soft red winter (~10% protein, Chicago) is a biscuit wheat. Hard red winter (11–12.5%, Kansas City) is bread, and the US wheat that competes with the Black Sea. Hard red spring (13.5%+, Minneapolis) is bought to lift the protein of a grist. Durum is a different species. Black Sea milling (11.5–12.5%) is the volume of the world.
+- **Protein is not the only spec that prices a cargo.** **Test weight** tells the miller how much flour comes out of a tonne; **falling number** measures sprout damage. A low falling number turns milling wheat into feed wheat in an afternoon — the same field, roughly $40/t less.
+- **Four exchanges, four different wheats.** Chicago (SRW) and Kansas City (HRW) trade 5,000 bu lots in ¢/bu; Minneapolis trades HRS; Matif trades EU milling wheat in **50-tonne lots, euros per tonne**, delivered into Rouen and Dunkirk. A Chicago tick is $12.50 a lot; a Matif tick is €12.50 a lot — the same small number on very different quantities of grain.
+- **The KC–Chicago spread is information.** At Wednesday's KC settle and Thursday's Chicago quote it was about 68¢/bu, or $26/t. That is the price of two protein points and a different customer base, not a mispricing.
+- **The largest wheat exporter on earth has no futures contract.** Black Sea wheat is priced by daily **assessment**. An assessment can be referenced in a contract but cannot be bought, sold or hedged.
+- **So Black Sea risk gets cross-hedged** — and a cross-hedge protects you against the world moving, not against your own market moving. Worked example: 60,000 t of Russian 12.5% hedged with 1,200 Matif lots loses **$452,000** when Europe rallies €10/t and the Russian cargo, stuck behind a damaged terminal, gains only $4/t.
+- The correlation that justified the hedge is highest on quiet days and lowest on the day it is tested. And a Matif hedge on a dollar cargo is also a euro position — hedge it, or say out loud that you are running it.
+
+### Vocabulary of the day
+
+| Term | Meaning |
+|---|---|
+| SRW — soft red winter | Low-protein soft wheat, the Chicago deliverable; cakes, biscuits, crackers |
+| HRW — hard red winter | 11–12.5% bread wheat, priced at Kansas City; the US export wheat |
+| HRS — hard red spring | 13.5%+ Minneapolis wheat, bought to lift the protein of a blend |
+| Durum | The pasta wheat — a separate species with its own thin market |
+| Protein spec | The contractual protein percentage that turns "wheat" into a price |
+| Test weight | Density measure; how much flour a miller extracts from a tonne |
+| Falling number | Sprout-damage test; a low number demotes milling wheat to feed |
+| Matif milling wheat (EBM) | Paris contract: 50 t per lot, €/t, delivered Rouen and Dunkirk |
+| Price assessment | A published daily price built by surveying the trade, where no futures exist |
+| Cross-hedge | Hedging with a contract that is not your grade or origin |
+| Inter-exchange spread | The gap between two exchanges pricing related but different goods |
+
+---
+
+## Quiz — Day 5
+
+**J-0 — Episode 5: Wheat, the map and the screens**
+
+**Q1.** You buy 60,000 t of Russian 12.5% milling wheat FOB at $224/t, unsold, and want the flat price off tonight. (a) How many lots is that in Matif, and how many in Chicago? (b) Why would a desk choose Matif over Chicago for this cargo, even though Chicago is far more liquid? (c) Name the three distinct exposures that are still on your book after the Matif hedge is executed.
+
+**Q2.** Over the following month, both wheats rally, but the KC–Chicago spread narrows from 68¢ to 30¢. You are long an HRW export cargo that you hedged in **Chicago**. (a) What is the spread telling you about the market? (b) Did your hedge help or hurt, and why? (c) What would you have had to do differently, and what would that have cost you in liquidity?
+
+**Q3.** You bought 25,000 t of French milling wheat, 11.5% protein, for October delivery, priced at a differential over Matif, and sold the Matif futures against it. Harvest rain arrives; the parcel tests at a falling number of 180 and the buyer's mill rejects it. Feed wheat is trading roughly $40/t under milling. (a) Quantify the loss. (b) Did the Matif hedge protect any of it? (c) Which episode-4 document decides whether this is your problem or the seller's?
+
+**J-1 — Episode 4: The physical chain, end to end**
+
+**Q4.** A Handysize loads 30,000 t at 6,000 t per weather working day. She tenders NOR on the 5th; loading takes 8 calendar days, and the statement of facts records one full day on which rain stopped all work. Demurrage is $12,000/day, despatch at half. (a) Who owes whom, and how much? (b) If instead she had finished one day inside laytime, what would have been paid, and by whom?
+
+**Q5.** You sell 60,000 t of wheat **CFR Alexandria** and have not yet fixed the vessel. Freight rallies $8/t before you charter. (a) Who carries that cost? (b) Would selling FOB have changed the answer, and what would you have given up instead? (c) If the cargo is lost mid-ocean, who bears it — and does the answer change between CFR and CIF?
+
+**J-3 — Episode 2: What a merchant does, and why basis is the whole game**
+
+**Q6.** You are long 60,000 t of physical soybeans, fully hedged with short futures. The board rallies $1.00/bu over two weeks and a colleague congratulates you on the market. (a) What is your actual P&L from that move? (b) What would have had to happen instead for the position to make $220,000? (c) State the general principle in one sentence.
+
+**Q7.** Two merchants quote the same import tender. One is asset-light; the other owns the export terminal at the load port. (a) Which of *space, time, form* does each of them capture? (b) Why can the terminal owner usually bid more aggressively and still be safe? (c) What has the terminal owner given up in exchange?
+
+---
+
+<br><br>
+
+## ▼ SOLUTIONS (spoilers) — scroll only after answering ▼
+
+<br><br>
+
+**A1.** (a) Matif is **50 t per lot**, so 60,000 t = **1,200 lots**. Chicago is 5,000 bu per lot and wheat converts at ~36.7 bu/t, so 60,000 t ≈ 2.2 m bu = **440 lots**. Same grain, very different ticket counts — "sell 1,200" and "sell 440" describe the identical tonnage. (b) Because the hedge has to track *your* cargo, and European milling wheat sells to the same customers as Russian wheat — North Africa, the Middle East, the same tender books, often the same vessels. Chicago prices soft red winter into a domestic delivery point for a different demand pool. Liquidity is worthless if the contract is uncorrelated with what you own. (c) Three exposures survive: **(1) cross-hedge / quality basis risk** — Russian 12.5% FOB versus EU milling can move apart, sometimes violently; **(2) currency** — the hedge settles in euros and the cargo is priced in dollars, so 1,200 lots at this summer's Paris levels is roughly €13–14m of FX exposure created *by the hedge*; **(3) freight and execution** — the cargo still has to be loaded and shipped, and none of that is in either price. The trap the question tests: people count the hedge as risk removed and forget that it *adds* two exposures of its own.
+
+**A2.** (a) A narrowing KC–Chicago spread means the **premium for bread-making protein is deflating** — HRW is losing its scarcity, typically because the export bid has moved elsewhere (a competing origin is winning the tenders) or because new-crop HRW supply is arriving. (b) Your hedge **hurt**. You were short Chicago against long HRW. Chicago rallied *more* than KC in relative terms (that is what a narrowing KC-over-Chicago spread means), so the short leg lost more than the physical gained. You were never hedged against wheat — you were short the KC-over-Chicago spread without deciding to be. (c) You should have hedged in **KC**, the contract for the wheat you actually own. The cost is liquidity: KC is materially thinner than Chicago, so the bid-offer and the slippage on a large roll are worse. That is the real trade-off — a worse fill in the right contract beats a perfect fill in the wrong one.
+
+**A3.** (a) A falling number of 180 is well inside sprout-damaged territory; the parcel is no longer milling wheat. At roughly $40/t of milling-over-feed, 25,000 t × $40 = **$1,000,000** of value destroyed, before you account for having to find a feed buyer at all, which may take a discount of its own. (b) **No.** The Matif hedge protects the flat price of *milling* wheat. Your loss is a **quality basis** loss: the spread between what you own and what the contract delivers. The futures leg does exactly what it promised and is entirely beside the point — this is the same failure mode as Q1(c), arriving through grade rather than geography. (c) The **load-port quality certificate**, which in most grain contracts is **final**. If the certificate at loading showed the cargo on spec, the risk has passed and the buyer's rejection is a dispute you are likely to win; if the cargo tested off-spec at load, it was never conforming and it is squarely your problem.
+
+**A4.** (a) Allowed laytime = 30,000 ÷ 6,000 = **5 weather working days**. Eight calendar days minus the rain day = **7 laytime days used**, so she is **2 days over**. The **charterer owes the owner 2 × $12,000 = $24,000** in demurrage. (Without the weather clause the bill would have been 3 days, $36,000 — the clause is worth $12,000 here.) (b) Finishing one day inside laytime earns **despatch**, customarily half the demurrage rate: the **owner pays the charterer $6,000**. The clock runs both ways, and that asymmetry — full rate against you, half rate for you — is why operators fight for hours, not days.
+
+**A5.** (a) **You do.** Under CFR the seller pays the freight to the destination, so an unfixed freight position is an open short: the $8/t rally costs you 60,000 × $8 = **$480,000**, and it lands on the trade even though the wheat price never moved. Selling CFR before fixing the vessel is a freight position, whether or not anyone called it one. (b) Selling **FOB** would have put the chartering — and this loss — on the buyer. What you give up is the freight economics and the control: an FOB sale hands away any margin you could earn between the freight you pay and the freight you charge, and it hands the buyer the choice of vessel, which is also the choice of laycan. (c) The cargo loss is the **buyer's** in both cases — risk passes at loading under CFR *and* CIF. The only difference is who bought the insurance: under CIF you procured the policy for the buyer's benefit and the buyer claims on it; under CFR the buyer had to arrange their own cover, and if they did not, that is their exposure, not yours. Cost and risk travel separately.
+
+**A6.** (a) **Approximately zero.** The physical length gains $1.00/bu and the short futures lose $1.00/bu; on ~2.2 m bu that is roughly $2.2m each way, and they cancel. That is the point of the hedge, and it is why a bull market does not enrich a hedged merchant. (b) The **differential** would have had to move. On 60,000 t (~2.2 m bu), 10¢/bu of basis improvement ≈ **$220,000** — buy 10¢ better, or sell 10¢ better, and that is the entire P&L. (c) In one sentence: **a merchant hedges away the flat price and is paid for the basis**, which is the price of logistics, quality and urgency.
+
+**A7.** (a) The asset-light merchant captures **space** — moving the cargo from an origin that has it to a destination that wants it — and can capture **time** only by paying someone else for storage. The terminal owner captures **space and time**, and if there is processing behind the terminal, **form** as well. (b) Because the terminal owner earns a second income stream — the elevation and throughput fee — on the same cargo. That toll is largely independent of the trading margin, so the same bid price carries a better expected return; the owner can shave the trading margin to win the tender and still be paid. In a congested port the effect is larger still: owning the bottleneck means the cargo loads while competitors queue. (c) Fixed costs and inflexibility. The asset must be fed volume in bad years as well as good, it cannot be redeployed to another origin when the flow reroutes, and it converts a variable, direction-neutral margin into a business with operational leverage.
+
+---
+
+## The episode, in writing
+
+### The tape: two ports, and a market that shrugged
+
+Thursday gave back part of Wednesday. December corn slipped about 0.6% to $4.77¾ on profit-taking after the yield cut; November soybeans finished roughly flat at $11.81¾, held up by a third straight day of announced Chinese new-crop buying — 505,000 t across the three days. Chicago September wheat eased 0.2% to $6.51¼.
+
+Overnight, Russian drones struck **Izmail**, Ukraine's Danube port. That is the fallback route: deepwater corridor loadings have been effectively zero since 22 July, and the Danube has been carrying what could still move. Wednesday it was Novorossiysk's two grain terminals; Thursday it was the alternative to them.
+
+The numbers around it are large. Ukrainian shipments in early August ran 76% below a year earlier. The season's wheat export forecast is 8.3 Mt. USDA took 2.5 Mt off combined Russian and Ukrainian exports in Wednesday's report.
+
+And Chicago wheat closed the week unchanged. That is the more interesting fact. US export sales last week were 255,900 t, down 14% on the week, and USDA now has the US taking 9.9% of world wheat trade, down from 10.9%.
+
+The mechanism is **flow substitution**, and it has a condition attached: destroyed supply reaches your price only if a buyer actually switches to you. When Black Sea wheat goes dark, Egypt, Algeria and Bangladesh call France, Argentina and Australia. The premium is real; it is simply being paid somewhere other than Chicago. Which is the subject of the day.
+
+### One word, five commodities
+
+Strip the word "wheat" off the contract and what remains is a protein specification, a hardness, and a set of customers.
+
+| Class | Protein | Where it prices | What it becomes |
+|---|---|---|---|
+| Soft red winter (SRW) | ~10% | **Chicago** | Cakes, biscuits, crackers |
+| Hard red winter (HRW) | 11–12.5% | **Kansas City** | Bread — and US exports |
+| Hard red spring (HRS) | 13.5%+ | **Minneapolis** | Blending, to lift a grist |
+| Durum | — | Thin, largely cash | Semolina and pasta |
+| Black Sea milling | 11.5–12.5% | **Assessments only** | Bread, most of the world's |
+
+Protein is the headline spec, not the only one. **Test weight** tells a miller how much flour comes out of a tonne. **Falling number** measures sprout damage: rain on a ripe crop starts the starch breaking down, and the dough will not hold. A low falling number demotes milling wheat to feed wheat in an afternoon — same field, same truck, roughly $40 a tonne less.
+
+On the desk that arrives as a spec negotiation, not a price negotiation:
+
+> **MILL:** What have you got for October, twelve and a half?
+> **SELLER:** Twelve five I can do. Falling number 280, test weight 78.
+> **MILL:** And at eleven five?
+> **SELLER:** Eleven five is nine dollars under.
+> **MILL:** Work me twelve five, sixty thousand, and send me the analysis certificate.
+
+Neither of them said the word wheat. They exchanged a protein, a falling number and a test weight — and the nine dollars between two of those numbers is the whole negotiation.
+
+### Four screens for one grain
+
+Chicago and Kansas City both trade 5,000-bushel lots quoted in cents per bushel, on soft red and hard red winter respectively. Minneapolis trades hard red spring. Paris — Matif — trades EU milling wheat in **50-tonne lots quoted in euros per tonne**, delivered into silo at Rouen and Dunkirk.
+
+One symmetry worth remembering, because it catches people:
+
+| | Tick | Lot | Value of a tick |
+|---|---|---|---|
+| Chicago | ¼¢/bu | 5,000 bu | **$12.50** |
+| Matif | €0.25/t | 50 t | **€12.50** |
+
+The same small number, in two currencies, on completely different quantities of grain. Sixty thousand tonnes is 440 Chicago lots and 1,200 Matif lots. Get the lot size wrong and you are not hedged, you are positioned.
+
+Put the two American contracts into the same unit and the spread becomes legible. Chicago at $6.51¼ is **$239/t**. Kansas City at Wednesday's $7.20¾ settle is **$265/t**. That is 68¢/bu, or $26/t, of KC over Chicago.
+
+```chart
+{"type":"bar","unit":"$ per tonne","title":"One word, three prices",
+ "caption":"Forty-one dollars a tonne between the cheapest and the dearest - and none of it is an arbitrage.",
+ "source":"Chicago Sep quote 13 Aug 2026; Kansas City Sep settlement 12 Aug 2026; Black Sea 12.5% FOB assessment, early August 2026",
+ "x":["Black Sea 12.5% FOB","Chicago SRW Sep","Kansas City HRW Sep"],
+ "series":[{"name":"$/t","values":[224,239,265]}]}
+```
+
+That spread is not a mispricing waiting to be collected. It is the price of two protein points, a different delivery geography and a different customer base. It is also information: when KC over Chicago widens, bread wheat is getting scarce; when it collapses, the export bid has gone somewhere else.
+
+### The hole in the middle of the map
+
+Russia is the largest wheat exporter in the world. Russia has no wheat futures contract that the world trades.
+
+Black Sea wheat is priced by **assessment**. Reporting agencies survey brokers and exporters daily, collect the bids, the offers and the trades that actually happened, and publish a number. That number is what an FOB cargo settles against, and physical contracts reference it by name.
+
+But an assessment is not a settlement. There is no clearing house behind it, no order book, no margin. You cannot buy it, sell it or hedge on it. So a desk long Russian wheat has to hedge with a contract that trades somebody else's grain — a **cross-hedge** — and thereby swap one risk for another.
+
+### The cross-hedge, priced
+
+Take 60,000 t of Russian 12.5% bought FOB at about $224/t in early August, unsold, and put the hedge on tonight.
+
+Chicago is the wrong wheat and the wrong customers. Matif is closer: European milling wheat competes for the same North African and Middle Eastern tenders. So sell 1,200 Matif lots.
+
+Now let three weeks pass. Europe rallies €10/t — about $11.50 at 1.15. The Russian cargo, sitting behind a damaged loading terminal and discounted to find any buyer at all, gains $4/t.
+
+```chart
+{"type":"waterfall","unit":"$ thousand","title":"Hedged, and down half a million",
+ "caption":"The hedge moved nearly three times as far as the cargo it was hedging.",
+ "source":"Worked example, episode 5",
+ "steps":[{"label":"Physical cargo, +$4/t","value":240,"kind":"base"},
+          {"label":"Short Matif, -$11.50/t","value":-692},
+          {"label":"Net on a hedged book","kind":"total"}]}
+```
+
+Minus $452,000, or about $7.50 a tonne, on a position the book calls flat.
+
+The general form matters more than the arithmetic. **A cross-hedge protects you against the world moving. It does not protect you against your own market moving.** An export tax in Moscow moves Russian FOB and does nothing to Paris. A wet harvest in northern France moves Paris and does nothing to Russia. And a strike on a loading terminal can lift the world price while making the grain stuck behind that terminal cheaper — which is the week the market has just had.
+
+So the correlation measured over two years of history, the number that justified the hedge in the first place, is at its highest on the quiet days and at its lowest on the day it is tested. Correlation is a fair-weather instrument.
+
+There is one further leak, and it is the one people forget. The Matif hedge settles in euros; the cargo is priced in dollars. Twelve hundred lots at this summer's Paris levels is something like €13–14m of currency exposure created entirely by the act of hedging. Hedge the grain and you have bought a currency position. Hedge that too — or say out loud that you are running it.
+
+**Monday:** corn. Crop calendars, the critical windows, and why one dry week in July outweighs a dry month in October.

package/ep05.script.txt

@@ -0,0 +1,97 @@
+Three exchanges. One word on the label. And forty dollars a tonne between them. ||| 0.6
+This is Soft Commodity Trading, episode five. ||| 0.4
+Wheat. The map, and the screens. And why the largest wheat exporter on earth has no futures contract at all. ||| 0.8
+First, the tape. ||| 0.4
+Thursday was a give-back day. ||| 0.35
+December corn slipped about half a percent, to four seventy-seven and three quarters. Profit-taking after Wednesday's yield cut. ||| 0.4
+November soybeans finished roughly flat, at eleven eighty-one and three quarters. ||| 0.35
+Chicago September wheat, six fifty-one and a quarter. Down a fraction. ||| 0.5
+Underneath the beans, one thing worth keeping: China bought new-crop U S soybeans on three consecutive days. Five hundred and five thousand tonnes in total. ||| 0.6
+Now the geopolitics, because wheat's week has not been happening on a screen. ||| 0.45
+Overnight, Russian drones hit Izmail. ||| 0.35
+Izmail is Ukraine's Danube port. The fallback route. The one still working after deepwater corridor loadings went to effectively zero on the twenty-second of July. ||| 0.5
+So the sequence is this. Wednesday, Ukraine idles two Russian grain terminals at Novorossiysk. Thursday, Russia burns the Ukrainian fallback. ||| 0.55
+Ukrainian shipments in early August were already running seventy-six percent below last year. The season forecast is eight point three million tonnes of wheat. ||| 0.5
+And Chicago wheat did nothing. ||| 0.6
+Hold onto that. It is the most instructive thing on the tape. ||| 0.45
+U S wheat export sales last week were two hundred and fifty-six thousand tonnes. Down fourteen percent on the week. ||| 0.4
+And the U S D A now has the United States taking nine point nine percent of world wheat trade. Down from ten point nine. ||| 0.5
+Supply is being destroyed in the Black Sea, and the American price is not moving. ||| 0.45
+Because a disruption only reaches your price if a buyer actually switches to you. ||| 0.45
+Egypt, Algeria, Bangladesh. When Black Sea wheat goes dark, they call France, Argentina, Australia. ||| 0.4
+They do not call Chicago. ||| 0.6
+Which is exactly today's subject. ||| 0.8
+Wheat is not a commodity. It is a category. ||| 0.55
+Start with protein. ||| 0.35
+Soft red winter is the Chicago wheat. Around ten percent protein. Soft, weak gluten. Cakes, biscuits, crackers. ||| 0.5
+Hard red winter is the Kansas City wheat. Eleven to twelve and a half percent. This is bread. It is also the American wheat that competes head-on with the Black Sea. ||| 0.55
+Hard red spring is Minneapolis. Thirteen and a half and up. Almost nobody bakes a loaf out of spring wheat alone. You buy it to lift the protein of everything else in the mill. ||| 0.6
+Durum is a different species. Semolina, pasta, its own thin market, and it does not trade against the others at all. ||| 0.5
+And Black Sea milling wheat, eleven and a half to twelve and a half, is simply the volume of the world. ||| 0.6
+Protein is not the only spec that prices a cargo. ||| 0.4
+Test weight tells the miller how much flour comes out of a tonne. ||| 0.35
+Falling number measures sprout damage. Rain on a ripe crop, the starch starts breaking down, and the dough will not hold. ||| 0.45
+A low falling number turns milling wheat into feed wheat in an afternoon. Same field, same truck, forty dollars a tonne less. ||| 0.7
+Here is how that actually gets priced, in the six seconds it takes. ||| 0.5
+MILL: What have you got for October, twelve and a half? ||| 0.25
+SELLER: Twelve five I can do. Falling number two eighty, test weight seventy-eight. ||| 0.25
+MILL: And at eleven five? ||| 0.25
+SELLER: Eleven five is nine dollars under. ||| 0.25
+MILL: Work me twelve five, sixty thousand, and send me the analysis certificate. ||| 0.6
+Notice that neither of them said the word wheat. ||| 0.45
+They said a protein, a falling number and a test weight. And the nine dollars between two of those numbers is the entire negotiation. ||| 0.8
+So. The screens. ||| 0.4
+Chicago trades soft red winter. Five thousand bushels a lot, cents per bushel. ||| 0.4
+Kansas City trades hard red winter. Same size, same units. ||| 0.35
+Minneapolis trades hard red spring. ||| 0.35
+And Paris, Matif, trades E U milling wheat. Fifty tonnes a lot, euros per tonne, delivered into Rouen and Dunkirk. ||| 0.55
+One detail worth carrying. A Chicago tick is a quarter of a cent on five thousand bushels. Twelve dollars fifty. ||| 0.45
+A Matif tick is twenty-five euro cents on fifty tonnes. Twelve euros fifty. ||| 0.45
+The same small number, in two currencies, on two completely different quantities of grain. Get the lot size wrong and you are not hedged, you are positioned. ||| 0.7
+Put the American ones side by side, in the same unit. ||| 0.45
+Chicago at six fifty-one and a quarter is two hundred and thirty-nine dollars a tonne. ||| 0.4
+Kansas City settled Wednesday at seven twenty and three quarters. Two hundred and sixty-five dollars a tonne. ||| 0.5
+So about sixty-eight cents a bushel, twenty-six dollars a tonne, of Kansas City over Chicago. ||| 0.45
+That spread is not a mispricing. It is the price of two protein points and a different set of customers. ||| 0.5
+When it widens, bread wheat is getting scarce. When it collapses, the export bid has gone somewhere else. ||| 0.75
+Now the hole in the middle of the map. ||| 0.45
+Russia is the largest wheat exporter in the world. ||| 0.4
+Russia has no wheat futures contract that the world trades. ||| 0.7
+Black Sea wheat is priced by assessment. ||| 0.4
+Agencies call brokers and exporters every day, take the bids, the offers and the trades that actually happened, and publish one number. ||| 0.5
+That number is what a Russian F O B cargo settles against. ||| 0.45
+But an assessment is not a settlement. You cannot buy it. You cannot sell it. And you cannot hedge on it. ||| 0.7
+So what do you do when you are long sixty thousand tonnes of Russian twelve and a half, and every screen available trades somebody else's wheat? ||| 0.55
+You cross-hedge. And you take on a new risk in exchange for the one you just removed. ||| 0.8
+Work it through. Sixty thousand tonnes of Russian milling wheat, bought F O B at around two hundred and twenty-four dollars a tonne in early August. ||| 0.5
+Unsold. You want the flat price off tonight. ||| 0.45
+Chicago is the wrong wheat and the wrong customers. ||| 0.4
+Matif is closer. European milling wheat sells to the same buyers, North Africa and the Middle East, out of the same tender books. ||| 0.55
+Size it. Fifty tonnes a lot, so sixty thousand tonnes is twelve hundred Matif lots. ||| 0.5
+In Chicago the same tonnage is four hundred and forty lots. Same grain, a third of the tickets. ||| 0.6
+Now let the market move. ||| 0.4
+Over three weeks, Europe rallies ten euros a tonne. At one fifteen, that is about eleven and a half dollars. ||| 0.5
+Your short hedge loses sixty thousand times eleven fifty. Six hundred and ninety-two thousand dollars. ||| 0.55
+And your Russian cargo? Sitting behind a damaged terminal, discounted to find a buyer. It gains four dollars a tonne. Two hundred and forty thousand. ||| 0.55
+Net, minus four hundred and fifty-two thousand dollars. ||| 0.5
+On a position you had called hedged. ||| 0.8
+Seven and a half dollars a tonne of slippage. That is what a cross-hedge costs when it goes wrong. ||| 0.55
+And here is the part worth taking away. ||| 0.4
+A cross-hedge protects you against the world moving. ||| 0.4
+It does not protect you against your own market moving. ||| 0.55
+An export tax in Moscow moves Russian F O B and does nothing to Paris. ||| 0.4
+A wet harvest in northern France moves Paris and does nothing to Russia. ||| 0.45
+And a strike on a loading terminal can lift the world price while the grain stuck behind that terminal gets cheaper. ||| 0.6
+Which is precisely the week the market has just had. ||| 0.55
+So the correlation you measured over two years, the number that justified the hedge in the first place, is highest on the quiet days and lowest on the day you need it. ||| 0.8
+One more leak, and it is the one people forget. ||| 0.45
+That Matif hedge settles in euros. Your cargo is priced in dollars. ||| 0.45
+Twelve hundred lots at this summer's Paris levels is something like thirteen or fourteen million euros of exposure that has nothing whatsoever to do with wheat. ||| 0.55
+Hedge the grain, and you have just bought a currency position. Hedge that too, or say out loud that you are running it. ||| 0.8
+Three things to keep. ||| 0.45
+One. Wheat is a category, not a commodity. Protein, falling number and test weight are the price. The word on the contract is only a label. ||| 0.6
+Two. Four exchanges price four different wheats. The spreads between them are information, not opportunity. Kansas City over Chicago is the price of bread-making protein, and it tells you where the export bid is. ||| 0.6
+Three. The biggest exporter on earth trades on an assessment, not a contract. So the Black Sea gets hedged with somebody else's wheat, and that hedge leaks hardest on exactly the days it is tested. ||| 0.7
+Monday, corn. Crop calendars and weather risk, and why one dry week in July outweighs a dry month in October. ||| 0.55
+The quiz is in the notes. Today's episode, plus the physical chain, plus what a merchant is actually paid for. ||| 0.5
+Soft Commodity Trading. See you Monday. ||| 0.8

package/feed.xml

@@ -2,7 +2,7 @@
 <rss version="2.0" xmlns:itunes="http://www.itunes.com/dtds/podcast-1.0.dtd" xmlns:atom="http://www.w3.org/2005/Atom">
   <channel>
     <title>Soft Commodity Trading</title>
-    <link>https://www.npmjs.com/package/@sdelsad/commodity-desk-daily</link>
+    <link>https://storage.googleapis.com/podcast-audio-2647223968/index.html</link>
     <description>An introduction to how soft commodities actually trade. A 10-minute briefing every weekday on grains, oilseeds, softs, freight, basis, and the craft of the merchant — taught at desk level.</description>
     <language>en-us</language>
     <itunes:author>Sébastien Delsad</itunes:author>
@@ -16,8 +16,32 @@
     <image>
       <url>https://cdn.jsdelivr.net/npm/@sdelsad/commodity-desk-daily@1.0.15/cover.jpg</url>
       <title>Soft Commodity Trading</title>
-      <link>https://www.npmjs.com/package/@sdelsad/commodity-desk-daily</link>
+      <link>https://storage.googleapis.com/podcast-audio-2647223968/index.html</link>
     </image>
+    <item>
+      <title>Ep 5 — Wheat: The Map and the Screens</title>
+      <link>https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep05.html</link>
+      <description><![CDATA[<p>Wheat is a category, not a commodity: soft red, hard red winter, spring, durum and Black Sea milling are five different goods priced on four different exchanges. And the largest exporter on earth has no futures contract at all, so its cargoes get hedged with somebody else's wheat - at a cost.</p><p><a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep05.html">Read this episode, with the charts, the glossary and the quiz &rarr;</a></p>]]></description>
+      <itunes:summary>Wheat is a category, not a commodity: soft red, hard red winter, spring, durum and Black Sea milling are five different goods priced on four different exchanges. And the largest exporter on earth has no futures contract at all, so its cargoes get hedged with somebody else's wheat - at a cost.
+
+Read this episode: https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep05.html</itunes:summary>
+      <enclosure url="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep05.mp3" length="8873324" type="audio/mpeg"/>
+      <guid isPermaLink="false">https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep05.mp3</guid>
+      <pubDate>Fri, 14 Aug 2026 05:00:00 GMT</pubDate>
+      <itunes:duration>739</itunes:duration>
+    </item>
+    <item>
+      <title>Ep 4 — The Physical Chain, End to End</title>
+      <link>https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep04.html</link>
+      <description><![CDATA[<p>FOB, CFR and CIF allocate cost and risk separately - and risk always passes at the ship's rail. Then one cargo through the execution clock: laycan, NOR, laytime, and how three quiet days at Santos become a seventy-two thousand dollar invoice.</p><p><a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep04.html">Read this episode, with the charts, the glossary and the quiz &rarr;</a></p>]]></description>
+      <itunes:summary>FOB, CFR and CIF allocate cost and risk separately - and risk always passes at the ship's rail. Then one cargo through the execution clock: laycan, NOR, laytime, and how three quiet days at Santos become a seventy-two thousand dollar invoice.
+
+Read this episode: https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep04.html</itunes:summary>
+      <enclosure url="https://cdn.jsdelivr.net/npm/@sdelsad/commodity-desk-daily@1.0.16/ep04.mp3" length="8096877" type="audio/mpeg"/>
+      <guid isPermaLink="false">https://cdn.jsdelivr.net/npm/@sdelsad/commodity-desk-daily@1.0.16/ep04.mp3</guid>
+      <pubDate>Thu, 13 Aug 2026 05:00:00 GMT</pubDate>
+      <itunes:duration>674</itunes:duration>
+    </item>
     <item>
       <title>Ep 3 — Futures Plumbing and the Shape of the Curve</title>
       <description>How a hedge actually gets placed — tickers, liquid months, rolling as a spread — and why variation margin turns price risk into liquidity risk. Then the forward curve as information: full carry, the store-or-sell decision, and why an inverse is the market screaming for grain now.</description>

package/glossary.md

@@ -9,21 +9,31 @@ Units, conventions and desk expressions, accumulated as the show introduces them
 - **at** — the small word that introduces the offer side (462 bid, at 462 and a half)  _(ep 1)_
 - **bag (coffee)** — 60 kg, how the coffee trade counts volume  _(ep 1)_
 - **bid** — the price a buyer will pay  _(ep 1)_
+- **bill of lading** — receipt, contract of carriage and document of title in one, whoever holds it owns the cargo  _(ep 4)_
 - **bushel** — volume measure standardized into weight, 60 lb for soybeans and wheat, 56 lb for corn  _(ep 1)_
 - **bushels per tonne** — about 36.7 for soybeans and wheat, 39.4 for corn  _(ep 1)_
 - **calendar spread** — the price difference between two months of the same contract, traded as one instrument at one price  _(ep 3)_
+- **cancelling date** — the last day of the laycan, after which the counterparty may cancel  _(ep 4)_
 - **carry market (contango)** — a curve with later months above nearer ones, the market pays for storage  _(ep 3)_
 - **carry-in** — stocks left over from the previous season, the starting point of a balance sheet  _(ep 2)_
 - **cents per bushel** — Chicago grain quoting unit, 4.39 dollars per bushel is spoken four thirty-nine  _(ep 1)_
+- **CFR** — cost and freight, the seller pays the voyage to a named destination but risk still passes at loading  _(ep 4)_
+- **charter party** — the contract hiring the vessel, between charterer and shipowner  _(ep 4)_
+- **CIF** — cost insurance and freight, CFR plus the seller buys the marine insurance the buyer would claim on  _(ep 4)_
 - **conversion factors** — 36.7 bushels per tonne for wheat and beans and 39.4 for corn, so cents per bushel times 0.367 or 0.394 gives dollars per tonne  _(ep 1)_
+- **cross-hedge** — hedging with a contract that is not your grade or your origin, which removes flat price and adds correlation risk  _(ep 5)_
 - **cwt** — hundredweight, 100 lb, the quoting unit for US rice and cattle  _(ep 1)_
 - **cwt (hundredweight)** — 100 lb, the quoting unit for US rice  _(ep 1)_
 - **Dec over** — spread quoting convention that names the expensive leg, December fifteen over means December is 15 cents above the other month  _(ep 3)_
 - **deferred** — months or shipment windows further out  _(ep 1)_
 - **demurrage** — the penalty owed when a vessel is held beyond the agreed laytime  _(ep 2)_
+- **despatch** — the reward paid when loading beats laytime, customarily half the demurrage rate  _(ep 4)_
 - **differential** — the premium or discount to a named futures month, as in November plus 80, the negotiated part of a physical quote  _(ep 1)_
 - **differential (basis)** — the premium or discount to a named futures month, quoted as plus 80 or minus 20  _(ep 1)_
 - **done** — the word that seals a trade  _(ep 1)_
+- **draft survey** — weighing a cargo by reading the ship's displacement before and after loading  _(ep 4)_
+- **durum** — the pasta wheat, a separate species with its own thin market  _(ep 5)_
+- **falling number** — the sprout-damage test, a low number demotes milling wheat to feed wheat  _(ep 5)_
 - **firm** — a tradable quote that binds if accepted, often with a time limit  _(ep 1)_
 - **five percent more or less** — the contractual tolerance on cargo size, exercised at the seller's option  _(ep 1)_
 - **flat price** — the full outright price level  _(ep 1)_
@@ -31,30 +41,44 @@ Units, conventions and desk expressions, accumulated as the show introduces them
 - **FOB** — free on board, the cargo is priced at the load port with the buyer taking it from the ship's rail  _(ep 2)_
 - **front month** — the nearest actively traded contract month, where liquidity is deepest  _(ep 3)_
 - **full carry** — storage plus interest per month of holding grain, the practical ceiling on a carry spread  _(ep 3)_
+- **hard red spring (HRS)** — the 13.5 percent plus Minneapolis wheat bought to lift the protein of a grist  _(ep 5)_
+- **hard red winter (HRW)** — the 11 to 12.5 percent bread wheat priced at Kansas City, the US wheat that competes with the Black Sea  _(ep 5)_
 - **hit** — your bid was taken by a seller  _(ep 1)_
 - **hit the bid** — to sell into someone else's bid  _(ep 1)_
+- **Incoterms** — the standard three-letter trade terms that allocate cost and risk between buyer and seller  _(ep 4)_
 - **indication** — a guide price that is not firm  _(ep 1)_
 - **initial margin** — the deposit the clearing house takes per lot when a position is opened  _(ep 3)_
+- **inter-exchange spread** — the price gap between two exchanges pricing related but different goods, such as Kansas City over Chicago  _(ep 5)_
 - **inverse (backwardation)** — a curve with nearer months above later ones, the market pays a premium for immediate delivery  _(ep 3)_
 - **laycan** — the window during which a vessel may present for loading  _(ep 1)_
+- **laytime** — the contractually allowed time to load or discharge before demurrage begins  _(ep 4)_
 - **lift the offer** — to buy from someone else's offer  _(ep 1)_
 - **lifted** — your offer was taken by a buyer  _(ep 1)_
 - **limit move** — an exchange-set maximum daily price change, trading pauses beyond it  _(ep 3)_
 - **line-up** — the queue of vessels waiting to load at a port, a key driver of origin basis  _(ep 2)_
 - **lot** — one futures contract, 5,000 bushels for Chicago grains, the unit desks count positions in  _(ep 1)_
+- **Matif milling wheat (EBM)** — the Paris contract, 50 tonnes a lot quoted in euros per tonne and delivered into Rouen and Dunkirk  _(ep 5)_
 - **metric tonne** — 2,204.6 lb, the grain trading weight unit outside the US  _(ep 1)_
 - **month codes** — F G H J K M N Q U V X Z for January through December, the Z is December  _(ep 1)_
+- **nomination** — formally naming the performing vessel under a cargo contract  _(ep 4)_
+- **notice of readiness (NOR)** — the master's formal declaration that the vessel has arrived and is ready, it starts the laytime clock  _(ep 4)_
 - **offer** — the price a seller will accept  _(ep 1)_
 - **paper** — exchange futures and options, used by a physical desk to hedge rather than to speculate  _(ep 2)_
 - **physical (cash)** — real cargoes under contract with specs and load windows, as opposed to paper  _(ep 2)_
 - **point** — one hundredth of a cent per pound, how softs desks count moves  _(ep 1)_
 - **point (softs)** — one hundredth of a cent per pound, so up 300 points means up 3 cents  _(ep 1)_
+- **price assessment** — a published daily price built by surveying brokers and exporters, used where no futures contract exists  _(ep 5)_
 - **prompt** — the nearby month or shipment window, ready to move now  _(ep 1)_
+- **protein spec** — the contractual protein percentage that turns the word wheat into a price  _(ep 5)_
+- **quality basis** — the spread between the grade you own and the grade the futures contract delivers  _(ep 5)_
 - **residual** — a figure obtained by subtraction, such as ending stocks, which absorbs any error in the larger numbers almost in full  _(ep 2)_
 - **roll** — closing a hedge in one month and reopening it further out, executed as a spread trade  _(ep 3)_
 - **short ton** — 2,000 lb, used by US soybean meal, about 10 percent lighter than a metric tonne  _(ep 1)_
+- **soft red winter (SRW)** — the low-protein soft wheat the Chicago contract delivers, used for cakes biscuits and crackers  _(ep 5)_
 - **space time form** — the three transformations a merchant is paid for, geography, storage and processing  _(ep 2)_
+- **statement of facts** — the port log of events both sides use to fight laytime claims  _(ep 4)_
 - **stocks-to-use** — ending stocks divided by total use, the market's tension gauge  _(ep 2)_
+- **test weight** — the density measure telling a miller how much flour comes out of a tonne  _(ep 5)_
 - **tick** — smallest price increment, a quarter cent per bushel in Chicago grains, worth 12.50 dollars per lot  _(ep 1)_
 - **ticker** — the short screen code a contract is spoken by, ZW wheat, ZC corn, ZS soybeans, ZM meal, ZL oil, KC coffee, SB sugar, CT cotton  _(ep 3)_
 - **variation margin** — the daily cash settlement of a position mark to market, paid the same day  _(ep 3)_
@@ -62,6 +86,7 @@ Units, conventions and desk expressions, accumulated as the show introduces them
 - **WASDE** — the USDA monthly World Agricultural Supply and Demand Estimates report  _(ep 1)_
 - **washed out** — offsetting trades cancel each other and only the price difference is settled  _(ep 1)_
 - **washout** — cancelling two offsetting physical contracts by settling the price difference instead of shipping  _(ep 1)_
+- **weather working day** — a laytime day that counts only when weather permits cargo work  _(ep 4)_
 - **work** — leave an order resting with a broker  _(ep 1)_
 - **work an order** — leave an order resting at your price and wait  _(ep 1)_
 - **workable** — the quoted price is negotiable  _(ep 1)_

package/package.json

@@ -1,7 +1,7 @@
 {
   "name": "@sdelsad/commodity-desk-daily",
-  "version": "1.0.15",
-  "description": "Soft Commodity Trading - Ep 3: Futures Plumbing and the Shape of the Curve",
+  "version": "1.0.17",
+  "description": "Soft Commodity Trading - Ep 5: Wheat: The Map and the Screens",
   "license": "CC-BY-4.0",
   "keywords": [
     "podcast",

package/ep03.md

@@ -1,163 +0,0 @@
-# Soft Commodity Trading — Ep 3
-## Futures Plumbing and the Shape of the Curve
-
----
-
-## Market pulse
-
-**WASDE day. The report lands at noon Washington time — the first survey-based, state-by-state look at the 2026 crop.**
-
-| Contract | Close (Tue) | Change |
-|---|---|---|
-| Corn, December | $4.60½ /bu | −1¼¢ |
-| Soybeans, November | $11.68¾ /bu | −10¾¢ (5-week low) |
-| Wheat, Chicago September | $6.30¼ /bu | −10¼¢ |
-| Wheat, Kansas City September | ~$6.99 /bu | −14¼¢ |
-| Wheat, Matif September | — | −€5.25/t |
-
-The average trade guess for corn yield is **182.5 bu/acre** against the USDA's standing 183 — but individual estimates run from about 180 to nearly 185. That range is the story: nobody trades the number, they trade the gap between the number and the guess. Soybean estimates centre on 52.9 bu/acre. Positioning ahead of the print was defensive — technical selling took beans to a five-week low.
-
-**The geopolitical read.** Wheat's drop had little to do with the report. Reports circulated that Russian and Ukrainian officials may meet in Turkey to discuss safe passage for vessels. A market that has spent a month pricing grain *trapped* behind a damaged coast spent Tuesday pricing the chance of it getting *out*: reopened export capacity would push trapped supply onto the world market (world price down), lift collapsed origin prices toward it, and deflate the freight and war-risk premiums that blew out in July. Nothing is signed — but headlines about capacity move price long before any vessel does. Ukraine, meanwhile, cut its own 2026/27 export forecast to roughly 38–40 Mt.
-
-If the noon number surprises, these markets can gap — and a gap on the board is a same-day cash demand for every hedger. That is today's subject.
-
----
-
-### Key takeaways
-
-- Every contract has a spoken **ticker**: ZW wheat, ZC corn, ZS beans, ZM meal, ZL oil; KC coffee, SB sugar, CT cotton. Ticker plus month code: "ZCZ" is December corn.
-- A contract lists many months, but **liquidity lives in a handful**, and mostly in the nearest one or two. Distant months are thin and wide.
-- Hedges travel between months by **rolling**, executed as a **calendar spread** at one price — "Sep-Dec fifteen, Dec over" — never as two flat prices.
-- **Variation margin** is settled in cash, same day. A hedge converts price risk into **liquidity risk**: in 2022, wheat limit-up days forced hedged European merchants and co-ops into emergency credit lines — some unwound *correct* hedges because the cash ran out.
-- The forward curve is information. **Carry (contango)**: later months over nearer. **Inverse (backwardation)**: front over back.
-- **Full carry** = storage + interest ≈ the ceiling on a carry spread. Worked example: wheat at $6.30, storage 5¢/month, interest ~3¢/month → full carry ~24¢ over three months; a 15¢ Sep-Dec spread pays ~60% of full carry.
-- The same spread says "don't store" to whoever pays commercial storage (15¢ − 24¢ = −9¢) and "store" to the elevator that owns its bin (15¢ − 9¢ interest = +6¢). **Your own costs decide.**
-- Spreads can't sit far *above* full carry (cash-and-carry arbitrage caps them) but have **no floor below** — an inverse is the market screaming for grain now, and it punishes storage twice: storage cost plus a bleeding roll.
-
-### Vocabulary of the day
-
-| Term | Meaning |
-|---|---|
-| Ticker | Short screen code for a contract: ZW, ZC, ZS, ZM, ZL, KC, SB, CT |
-| Front month | The nearest actively traded contract month, where liquidity is deepest |
-| Roll | Closing a hedge in one month, reopening it further out — traded as a spread |
-| Calendar spread | Price difference between two months of the same contract, traded as one instrument |
-| "Dec over" | Spread-quoting convention naming the expensive leg |
-| Carry market (contango) | Later months above nearer ones — the market pays for storage |
-| Inverse (backwardation) | Front months above later ones — the market pays for immediate delivery |
-| Full carry | Storage plus interest per month — the practical ceiling on a carry spread |
-| Initial margin | The clearing-house deposit taken per lot when a position is opened |
-| Variation margin | Daily cash settlement of the position's mark-to-market, paid same day |
-| Limit (limit move) | Exchange-set maximum daily price change; trading pauses beyond it |
-
----
-
-## Quiz — Day 3
-
-**J-0 — Episode 3: Futures plumbing and the shape of the curve**
-
-**Q1.** December corn trades at $4.60 and the March contract at $4.72 — "March twelve over." Commercial storage runs 4¢/bu/month and money costs 6% a year. A farmer with his own paid-off bins and a commercial elevator that rents space both ask you the same question: store or sell? Compute full carry, the percentage of full carry the spread is paying, and give each of them their answer with numbers.
-
-**Q2.** An elevator is long 1 million bushels of physical wheat, fully hedged with 200 short lots. WASDE shocks the market and wheat locks limit-up 70¢ two days running. (a) What cash leaves the account, and by when? (b) What happened to the total economic value of the position? (c) The CFO says "close the futures, we can't fund this" — explain precisely what risk the desk would be taking on the day it complies.
-
-**Q3.** On the same screen you see September wheat trading 30¢ *over* December, while the flat price is unchanged on the week. What is the market telling you, why can this happen with no move in flat price, and why is holding hedged inventory into this curve expensive twice over?
-
-**J-1 — Episode 2: What a merchant does, and why basis is the whole game**
-
-**Q4.** You have sold a Panamax of beans CFR Shandong at futures +80¢ for October, and you are still buying the physical at Santos. While you accumulate, the Santos differential moves from −20 to −5. Quantify the damage on 60,000 t (≈2.2 million bu), name which of the three risks that survive a "perfect" hedge this is, and say what the desk could have done differently.
-
-**Q5.** Suppose the Turkey talks produce a real safe-passage corridor next month. Using the three transformations (space, time, form), predict the direction of: (a) world wheat flat price, (b) Ukrainian origin basis, (c) freight and war-risk premiums — and explain why a merchant with silo capacity at Odesa might *lose* income from the deal even as the country's farmers gain.
-
-*(J-3 block: no episode — the show is three days old.)*
-
----
-
-<br><br>
-
-## ▼ SOLUTIONS (spoilers) — scroll only after answering ▼
-
-<br><br>
-
-**A1.** Full carry Dec→March: storage 4¢ × 3 = 12¢; interest = $4.60 × 6% = 27.6¢/yr ≈ 2.3¢/month × 3 ≈ 7¢. **Full carry ≈ 19¢**; the 12¢ spread pays **~63% of full carry**. The *elevator renting space*: capture 12¢, pay 19¢ → **−7¢/bu: sell now**, don't store at commercial rates. The *farmer with paid-off bins*: his out-of-pocket is mostly interest, ~7¢ → 12 − 7 = **+5¢/bu: store and hedge in March**. Same curve, opposite answers — the spread is a price, not an instruction; your own cost of carry decides. (Trap: forgetting interest and comparing 12¢ only to storage.)
-
-**A2.** (a) 200 lots × 5,000 bu × $0.70 × 2 days = **$1.4 million of variation margin**, wired **same day each day** — plus a likely increase in initial margin, since exchanges raise margins in volatile markets. (b) Nothing: the bin gained what the short lost; the *position* is intact, the *cash* is out the door. A hedge converts price risk into liquidity risk. (c) Closing the shorts makes the elevator **outright long 1 million bushels at the top of a limit-up spike**. If the market retraces even half the move, that is a $350k loss with no offset — the desk would be converting a funding problem into a naked flat-price bet, at the worst entry of the year. The correct tools are credit lines and treasury planning sized *before* the position, not liquidation into strength.
-
-**A3.** A 30¢ inverse is the market **paying a premium for grain now** — demand for prompt delivery exceeds nearby supply, and the market is bidding grain out of storage. It needs no flat-price move because a spread reprices *relative* scarcity: the front can rise while the back falls. Holding hedged inventory into an inverse costs you twice: you **pay storage** on the physical while the curve pays you nothing for time, and every **roll of the short hedge bleeds** — you buy back the expensive front month and re-sell a cheaper deferred month, locking in the inverse as a loss each cycle. An inverse is a signal to move inventory, not sit on it.
-
-**A4.** The differential moved 15¢ against you before you finished buying: 15¢ × 2.2 M bu ≈ **$330,000** — most of a typical Panamax margin. This is **origin basis risk while accumulating**, the second of the three risks that survive a perfect hedge (unfixed freight, origin basis, execution). Alternatives: buy the physical *before* selling the destination leg (carry the opposite basis leg instead), accumulate faster via more counterparties, or pre-buy part of the cargo when quoting the sale — in effect pricing the accumulation risk into the offer.
-
-**A5.** (a) World flat price **down** — trapped supply reaches the export market (Tuesday's tape already showed this on a rumour). (b) Ukrainian origin basis **up** — origin prices collapsed ~30% because grain couldn't leave; a corridor reconnects origin to world price and the discount narrows. (c) Freight and war-risk premiums **compress** — the space transformation gets cheaper. The Odesa silo owner loses because his asset was earning scarcity rent on the *time* transformation: stranded grain had to be stored, at rates set by desperation. A corridor drains the queue, storage demand falls, and his margin normalises — while farmers, long unhedged physical at the origin, capture the basis recovery. One man's dislocation premium is another man's stranded crop.
-
----
-
-## The episode, in writing
-
-### Being right nearly broke them
-
-In the spring of 2022, grain merchants across Europe faced a strange emergency. They were right about the market — wheat was soaring and they owned wheat — and they were running out of cash so fast that some needed emergency credit lines from their banks.
-
-Understanding how that happens means understanding the plumbing under every hedge: the contracts, the months, the margin flows, and the forward curve they trace out.
-
-### The screen and its language
-
-Every contract has a **ticker**, spoken instead of the full name:
-
-| Market | Ticker |
-|---|---|
-| Chicago wheat / corn / soybeans | ZW / ZC / ZS |
-| Soybean meal / oil | ZM / ZL |
-| Coffee / sugar / cotton (ICE) | KC / SB / CT |
-
-Add the month code and you have the desk's shorthand: **ZCZ** is December corn. Nobody says more than they have to.
-
-A grain contract lists a dozen delivery months, but volume concentrates in a few — for corn: March, May, July, September, December — and on any given day mostly in the nearest one or two. The **front month** is deep and tight; eighteen months out the screen is thin and the bid-ask wide. So a hedge for a distant commitment often starts life nearby and gets **rolled** — closed in one month, reopened further out — as time passes.
-
-Rolls are not executed at two flat prices. They trade as a **calendar spread**, one instrument at one price:
-
-> **DESK:** I'm short fifty September wheat. Need them in December. Where's the spread?
-> **BROKER:** Sep-Dec fifteen, Dec over.
-> **DESK:** Meaning?
-> **BROKER:** December's fifteen cents above September. I can roll you at fifteen.
-> **DESK:** Do it. Fifty times.
-
-"Dec over" names the expensive leg. And that fifteen cents is not noise — it is the market's price for three months of time. Hold that thought.
-
-### Margin: where hedges eat cash
-
-Open a futures position and the clearing house takes a deposit — **initial margin**, a few thousand dollars a lot. Then, every day, the position is marked to the close and the difference settles in cash, same day: **variation margin**.
-
-For a speculator that is just the score. For a hedger it is a trap built into the plumbing:
-
-| | Value | Cash |
-|---|---|---|
-| 500,000 bu wheat in the bin | +$1,000,000 on a $2 rally | arrives when the wheat is sold |
-| 100 short lots (the hedge) | −$1,000,000 | leaves **this week**, in daily wires |
-| **Net** | **zero — the hedge worked** | **−$1,000,000 out the door now** |
-
-That asymmetry is what 2022 did at scale. With Chicago and Matif wheat locked limit-up day after day, hedged merchants and cooperatives faced margin calls in the hundreds of millions. Some secured emergency lines; a few unwound *correct* hedges at the worst possible moment — not because the position was wrong, but because the cash ran out.
-
-**A hedge converts price risk into liquidity risk.** The risk does not vanish; it changes shape.
-
-### The curve talks
-
-Plot every month on one chart and you have the forward curve. When later months trade above nearer ones, the market is in **carry** — desks say a carry market, textbooks say contango. When the front trades over the back, the curve is **inverted** — backwardation.
-
-The carry has a ceiling with a name: **full carry**, the actual cost of holding grain a month — storage plus interest on the money tied up.
-
-| Full carry, wheat at $6.30 | ¢/bu/month |
-|---|---|
-| Commercial storage | ~5 |
-| Interest (5.5% on $6.30) | ~3 |
-| **Full carry** | **~8** → ~24¢ over three months |
-
-The broker's Sep-Dec quote was 15¢ — the spread pays about **60% of full carry**. That number is a message, and it reads differently depending on who you are. Store at commercial rates: earn 15¢, pay 24¢ — lose 9¢, so sell. Own your bins: out-of-pocket is mostly interest, ~9¢ for the quarter — pocket 6¢/bu for waiting. The curve doesn't tell you what to do; it tells you what you get paid. Your own costs decide.
-
-One structural rule: a spread can approach full carry but cannot sit far beyond it — past that point, buying the front, storing, and delivering into the back is nearly free money, and arbitrage drags it back. Downward, there is no floor. That asymmetry is the point: when the spread narrows through zero and **inverts**, the market is screaming for grain *now*. It pays a premium for prompt delivery and punishes storage — hold inventory into an inverse and you pay storage while every roll of the hedge bleeds.
-
-Desks read the spread as a supply gauge: wide carry, comfortable supply; narrowing carry, tightening; inverse, get it here now. Often a more honest signal than flat price itself.
-
-### Takeaway
-
-Liquidity lives in a few months, and hedges travel between them as spreads. Variation margin is cash, today — it can force a solvent desk out of a correct position, so funding is sized before the trade, not after the call. And the curve is information: full carry is the ceiling, the percentage of full carry is the message, an inverse is a scream.
-
-**Tomorrow:** off the screen and onto the water — FOB, CFR, CIF, laytime, demurrage, and how a three-day delay becomes a six-figure invoice.

package/ep03.script.txt

@@ -1,61 +0,0 @@
-In the spring of twenty twenty-two, grain merchants across Europe faced a strange emergency. ||| 0.4
-They were right about the market. Wheat was soaring, and they owned wheat. ||| 0.4
-And they were running out of cash so fast that some had to call their banks for emergency credit lines. ||| 0.5
-Being right nearly broke them. ||| 0.7
-This is Commodity Desk Daily, episode three. Today, the machinery of futures. How a hedge actually gets placed, why it eats cash, and what the shape of the forward curve is quietly telling you. ||| 0.8
-First, the tape. ||| 0.4
-It is WASDE day. The report lands at noon in Washington, and the screens went quiet ahead of it. ||| 0.4
-December corn closed at four sixty and a half, down a cent and a quarter. November soybeans, eleven sixty-eight and three quarters, down ten and three quarters. A five-week low. ||| 0.4
-Chicago September wheat fell ten and a quarter to six thirty and a quarter. Kansas City settled just under seven dollars. Matif September gave up five euros and a quarter in Paris. ||| 0.5
-On corn yield, the average trade guess is one eighty-two and a half bushels an acre, against the U S D A's one eighty-three. But the guesses run from one eighty to nearly one eighty-five. ||| 0.4
-That range is the story. August is the first survey-based report of the season, the first state-by-state look at the crop. Nobody trades the number itself. They trade the gap between the number and the guess. ||| 0.5
-Wheat's drop had a different driver. Reports that Russian and Ukrainian officials may meet in Turkey to discuss safe passage for vessels. ||| 0.4
-For a month, this market has priced grain trapped behind a damaged coast. Yesterday it spent the session pricing the chance of that grain getting out. ||| 0.4
-Follow the mechanism. Reopened export capacity means trapped supply reaches the world market, so the world price falls. Origin prices rise to meet it. And the freight and insurance premiums that blew out in July start to deflate. ||| 0.4
-Nothing is signed. But headlines about capacity move price long before any vessel moves. Ukraine, meanwhile, cut its own export forecast for the season to around thirty-eight to forty million tonnes. ||| 0.5
-And here is why today's tape matters for today's lesson. If the noon number surprises, these markets can gap. And a gap on the board is not an accounting entry. It is a cash demand, same day, for every hedger holding a position. ||| 0.6
-Here is how that machinery works. ||| 0.7
-Start with the screen itself. Every contract has a ticker, a short code the desk speaks instead of the full name. ||| 0.4
-Chicago wheat is Z W. Corn, Z C. Soybeans, Z S. Meal and oil, Z M and Z L. In the softs, coffee is K C, sugar is S B, cotton is C T. ||| 0.4
-Nobody says December corn futures. They say Z C Z. The ticker, then the month code from episode one. Z for December. ||| 0.5
-You know the lot, five thousand bushels, and the tick, a quarter cent, twelve dollars fifty a lot. Now the part nobody teaches. Which months you can actually use. ||| 0.4
-A grain contract lists a dozen delivery months, but the volume lives in a handful. In corn, March, May, July, September, December. And on any given day, most of the trade is in the nearest one or two. ||| 0.4
-The front month is deep and tight. Eighteen months out, the screen goes thin. A few hundred lots a day, and wide markets. ||| 0.4
-So a hedge for next summer often starts life in a nearby month, and gets rolled, closed there, reopened further out, as time passes. ||| 0.5
-Rolling is not done at two separate prices. It is done as a spread. Listen. ||| 0.5
-DESK: I'm short fifty September wheat. Need them in December. Where's the spread? ||| 0.25
-BROKER: Sep Dec fifteen, Dec over. ||| 0.25
-DESK: Meaning? ||| 0.25
-BROKER: December's fifteen cents above September. I can roll you at fifteen. ||| 0.25
-DESK: Do it. Fifty times. ||| 0.6
-Notice nobody quoted a flat price. The roll trades as one instrument, the spread, at one price. Fifteen cents. Dec over means December is the expensive leg. ||| 0.4
-And that fifteen cents is not noise. It is the market's price for three months of time. Hold that thought. It is the second half of this episode. ||| 0.7
-First, the cash. When you open a futures position, the clearing house takes a deposit. Initial margin. Call it a few thousand dollars a lot. ||| 0.4
-Then, every single day, your position is marked to the close. If it moved against you, you wire the difference. That day. Variation margin. If it moved for you, cash arrives. ||| 0.4
-For a speculator, that is just the score. For a hedger, it is a trap built into the plumbing. ||| 0.5
-Here is the trap. Say an elevator holds five hundred thousand bushels of wheat. Physical, in the bin, hedged with a hundred short lots. ||| 0.4
-Wheat rallies two dollars. The wheat in the bin is worth a million dollars more. The short futures have lost a million. Net, nothing. The hedge did its job. ||| 0.4
-But look at the cash. The million on the futures leaves your bank account this week, in daily wires. The million in the bin arrives only when the wheat is sold. Weeks or months away. ||| 0.5
-Same position. Perfectly hedged. And a million dollars of cash out the door. ||| 0.6
-That is twenty twenty-two. When the war took Chicago and Matif wheat up limit, day after day, hedged merchants and cooperatives across Europe faced margin calls in the hundreds of millions. ||| 0.4
-Some called their banks for emergency lines. A few unwound good hedges at the worst possible moment. Not because the position was wrong, but because the cash ran out. ||| 0.5
-Write this down. A hedge converts price risk into liquidity risk. The risk does not vanish. It changes shape. ||| 0.7
-Now the second half. Put every contract month on one chart and you get the forward curve. And the curve talks. ||| 0.5
-When later months trade above nearer ones, the market is in carry. Desks say a carry market. The textbooks say contango. When nearer months trade above later ones, the curve is inverted. Backwardation. ||| 0.5
-The carry has a ceiling, and the ceiling has a name. Full carry. What it actually costs to hold grain from one month to the next. Storage, plus the interest on the money tied up. ||| 0.4
-Work it. Wheat around six thirty. Commercial storage, call it five cents a bushel a month. Interest at five and a half percent on six dollars thirty, about three cents a month. Full carry, roughly eight cents a month. Twenty-four cents for three months. ||| 0.5
-Our broker just quoted Sep Dec at fifteen. Fifteen against twenty-four. The spread is paying about sixty percent of full carry. ||| 0.5
-That number is a message. Store your wheat and hedge it in December, and the market hands you fifteen cents against costs of twenty-four. Storing at commercial rates loses nine cents a bushel. ||| 0.4
-So who stores? The elevator that owns its space. His out-of-pocket cost is mostly the interest. Three cents a month, nine for the quarter. Fifteen minus nine. He pockets six cents a bushel for waiting. ||| 0.5
-Same spread, two different answers. The curve does not tell you what to do. It tells you what you get paid. Your own costs decide. ||| 0.6
-One rule before the inverse. A spread can approach full carry, but it cannot sit far beyond it. Past full carry, buying the near month, storing, and delivering into the far month is nearly free money, and arbitrage drags the spread back in. ||| 0.5
-Downward, though, there is no floor. And that asymmetry is the whole point. ||| 0.5
-When the spread narrows through zero and inverts, the front trading over the back, the market is telling you something loud. ||| 0.4
-An inverse is the market screaming for grain now. It pays a premium for prompt delivery, and it punishes storage. Hold inventory into an inverse and you pay storage while your hedge bleeds on every roll. ||| 0.5
-So desks read the spread as a supply gauge. Wide carry, comfortable supply. The market pays for patience. Narrowing carry, tightening. Inverse, get it here now. It is often a more honest signal than the flat price itself. ||| 0.6
-What to keep from today. ||| 0.4
-Liquidity lives in a few months, and hedges travel between them as spreads. ||| 0.4
-A hedge converts price risk into liquidity risk. Variation margin is cash, today, and it can force a solvent desk out of a correct position. ||| 0.4
-And the curve is information. Full carry is the ceiling. The percentage of full carry is the message. An inverse is a scream. ||| 0.6
-Tomorrow we leave the screen for the water. The physical chain end to end. F O B, C F R, C I F, laytime, demurrage, and how a three-day delay turns into a six-figure invoice. ||| 0.4
-The quiz is in the notes. Three questions on today, two on basis from yesterday. If the curve section clicked, the store-or-sell question will take you ninety seconds. See you tomorrow. ||| 0.5