@sdelsad/commodity-desk-daily 1.0.48 → 1.0.50

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Files changed (18) hide show
  1. package/covered.md +1 -0
  2. package/email.html +88 -71
  3. package/email.txt +466 -375
  4. package/ep16.html +727 -0
  5. package/ep16.md +256 -0
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  11. package/glossary.md +10 -0
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package/email.html CHANGED
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- <title>Soft Commodity Trading — Ep 15: Cotton, Rice and Juice</title>
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+ <title>Soft Commodity Trading — Ep 16: Spreads: Calendar, Inter-Commodity, Inter-Exchange</title>
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- <div style="display:none;max-height:0;overflow:hidden;mso-hide:all;">A cotton mill that has taken delivery but not set a price is short the board without owning a single contract, and the CFTC publishes exactly how much of that unfixed buying is still to come.</div>
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+ <div style="display:none;max-height:0;overflow:hidden;mso-hide:all;">Two wheat curves lean opposite ways on the same Friday, and the spread between them carries a currency nobody ordered.</div>
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  <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="background:#ece7db;">
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  <table role="presentation" width="600" cellpadding="0" cellspacing="0" border="0" align="center" style="width:100%;max-width:600px;background:#faf7f1;border:1px solid #e3ddd2;">
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- <tr><td style="padding:30px 28px 24px;background:#faf7f1;"><p style="margin:0 0 6px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Soft Commodity Trading</p><p style="margin:0 0 14px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.14em;text-transform:uppercase;color:#8b8375;">Episode 15 · Friday 4 September 2026 · 13 min 35</p><h1 style="margin:0 0 12px;font-family:Georgia,'Times New Roman',Times,serif;font-size:29px;line-height:1.2;font-weight:normal;color:#16110c;">Cotton, Rice and Juice</h1><p style="margin:0 0 22px;font-family:Georgia,'Times New Roman',Times,serif;font-size:17px;line-height:1.5;color:#4a4238;">A cotton mill that has taken delivery but not set a price is short the board without owning a single contract, and the CFTC publishes exactly how much of that unfixed buying is still to come.</p><table role="presentation" cellpadding="0" cellspacing="0" border="0"><tr><td bgcolor="#1d4032" style="border-radius:6px;"><a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep15.mp3" style="display:inline-block;padding:14px 28px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:15px;font-weight:bold;color:#faf7f1;text-decoration:none;border-radius:6px;">▶ Listen — 13 min</a></td></tr></table></td></tr>
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- <tr><td style="padding:0 28px 22px;background:#faf7f1;"><p style="margin:0;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:13px;line-height:1.6;color:#4a4238;"><a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep15.html" style="color:#1d4032;font-weight:bold;">Read this episode online &rarr;</a><span style="color:#8b8375;"> &nbsp;·&nbsp; charts, the quiz and the running glossary</span></p></td></tr>
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+ <tr><td style="padding:30px 28px 24px;background:#faf7f1;"><p style="margin:0 0 6px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Soft Commodity Trading</p><p style="margin:0 0 14px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.14em;text-transform:uppercase;color:#8b8375;">Episode 16 · Monday 7 September 2026 · 12 min 05</p><h1 style="margin:0 0 12px;font-family:Georgia,'Times New Roman',Times,serif;font-size:29px;line-height:1.2;font-weight:normal;color:#16110c;">Spreads: Calendar, Inter-Commodity, Inter-Exchange</h1><p style="margin:0 0 22px;font-family:Georgia,'Times New Roman',Times,serif;font-size:17px;line-height:1.5;color:#4a4238;">Two wheat curves lean opposite ways on the same Friday, and the spread between them carries a currency nobody ordered.</p><table role="presentation" cellpadding="0" cellspacing="0" border="0"><tr><td bgcolor="#1d4032" style="border-radius:6px;"><a href="https://cdn.jsdelivr.net/npm/@sdelsad/commodity-desk-daily@1.0.49/ep16.mp3" style="display:inline-block;padding:14px 28px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:15px;font-weight:bold;color:#faf7f1;text-decoration:none;border-radius:6px;">▶ Listen — 12 min</a></td></tr></table></td></tr>
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+ <tr><td style="padding:0 28px 22px;background:#faf7f1;"><p style="margin:0;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:13px;line-height:1.6;color:#4a4238;"><a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep16.html" style="color:#1d4032;font-weight:bold;">Read this episode online &rarr;</a><span style="color:#8b8375;"> &nbsp;·&nbsp; charts, the quiz and the running glossary</span></p></td></tr>
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  <tr><td style="padding:0 28px;background:#faf7f1;"><table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0"><tr><td height="1" style="height:1px;line-height:1px;font-size:1px;background:#e3ddd2;">&nbsp;</td></tr></table></td></tr>
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- <tr><td style="padding:24px 28px 4px;background:#faf7f1;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Market pulse</p><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Cotton gave back two and a half cents, and it was the biggest move on the board.</strong></p>
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- <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Market</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Contract</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Settle</th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Change</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Cotton No. 2</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Dec 26</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">86.45 ¢/lb</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#8a2f2f;font-weight:bold;">−248 pts</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Chicago wheat</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Dec 26</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">754¼ ¢/bu</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#8a2f2f;font-weight:bold;">−19¾¢</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Soybean oil</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Oct 26</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">69.63 ¢/lb</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#8a2f2f;font-weight:bold;">−101 pts</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Corn</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Dec 26</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">540¾ ¢/bu</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#8a2f2f;font-weight:bold;">−2¾¢</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Rough rice</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Nov 26</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">$15.70 /cwt</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#8a2f2f;font-weight:bold;">−2½¢</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Soybeans</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Nov 26</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">1316¼ ¢/bu</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#215c44;font-weight:bold;">+6¢</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Soybean meal</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Oct 26</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">$348.60 /st</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#215c44;font-weight:bold;">+$5.70</span></td></tr></tbody></table>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Thursday was a soft session with one sharp exception. December cotton settled at 86.45, down 248 points — a point being one hundredth of a cent, so two and a half cents came off the board in a day. Chicago wheat lost nearly twenty cents, or 2.6 percent. Beans and meal were the only things higher.</p>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Cotton had climbed through August. Late in the month the December contract printed a fresh contract high near 89.45, on a US crop rated 38 percent good against 55 percent a year earlier, and on world ending stocks forecast at the lowest since 2011/12. Thursday&#x27;s break undid roughly a third of that.</p>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>The policy read.</strong> China&#x27;s state reserve has been auctioning cotton into its own mills, and the auctions have cleared in full for 24 consecutive sessions — about 192,497 tonnes placed by 21 August. A reserve auction that sells out every day is not a price cap. It is a government discovering that domestic supply is short, and a domestic bid that eventually has to be met from outside. That is the transmission: reserve draw first, import demand second, world price third.</p>
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- <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="margin:6px 0 22px;"><tr><td align="center" style="border:1px solid #e3ddd2;background:#faf7f1;padding:10px;"><img src="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep15_chart1.png" width="522" alt="Thursday&#x27;s moves — Cotton and wheat carried the session. Everything else was noise around them, and only the bean complex held. — CBOT and ICE settlements, Thursday 3 September 2026" title="Thursday&#x27;s moves — Cotton and wheat carried the session. Everything else was noise around them, and only the bean complex held. — CBOT and ICE settlements, Thursday 3 September 2026" style="display:block;width:100%;max-width:522px;height:auto;border:0;outline:none;text-decoration:none;"></td></tr></table><ul style="margin:0 0 16px;padding-left:22px;"><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">An <strong>unfixed on-call sale is a buy order that has not been placed yet</strong>, and it carries a deadline. Read the report by futures month, not by total: the total gives the mood, the months give the trade.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Mills fix into weakness, growers fix into strength. Whoever is closer to first notice day is the one who has to move.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A big net on-call number is a <strong>spread signal, not a flat price signal</strong>. In late August the pressure sat in March and July 2027, while December 2026 carried net latent <em>selling</em>.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Notional is not size.</strong> A rice lot and a corn lot are worth about the same money and are not remotely the same position.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">In a thin market, size is measured in <strong>days to liquidate</strong>, not dollars.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Rice is thin because policy is its supply curve. Juice is thin because its supply is biology, and the trees are not coming back.</li></ul>
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- <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Term</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Meaning</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Cotton No. 2 (CT)</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The ICE cotton contract: 50,000 lb net weight, quoted in US cents per pound. One cent is $500 a lot, one point is $5</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>bale</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The unit every cotton statistic uses: 480 lb net in the United States, so one CT lot is about 104 bales</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>on-call sale</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Cotton sold by a merchant to a mill at an agreed differential, with the futures leg left for the buyer to fix later</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>on-call purchase</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Cotton bought by a merchant from a grower, with the futures leg left for the seller to fix later</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>unfixed</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">A price-to-be-fixed contract whose futures leg has not been set, so the exposure is still outright</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>cotton on-call report</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The weekly CFTC table of unfixed sales and purchases by futures month — a map of forced order flow</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>first notice day</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The first date a short may tender delivery, and the practical deadline for fixing or rolling an unfixed position</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>rough rice contract</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The CBOT rice future: 2,000 cwt of long grain rough rice, quoted in dollars per hundredweight</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>FCOJ-A</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The ICE orange juice contract: 15,000 lb of orange solids, quoted in US cents per pound</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>thin market</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">A market where the price you get depends materially on the size you want, whatever a single lot is worth</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>market depth</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The quantity resting near the touch — what actually sets execution cost, as opposed to headline volume</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>days to liquidate</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Position divided by honest daily volume: the sizing measure that replaces a notional limit in a thin market</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>state reserve auction</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">A government selling from its own stockpile into its domestic market, whose clearing rate reads as a tightness signal</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>citrus greening</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Huanglongbing, the bacterial disease that permanently cuts an infected orange tree&#x27;s yield and cannot be cured</td></tr></tbody></table></td></tr>
20
+ <tr><td style="padding:24px 28px 4px;background:#faf7f1;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Market pulse</p><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Wheat lost fifty cents on the week in Chicago, and almost none of it was about wheat.</strong></p>
21
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Monday was Labor Day, so the CBOT day session was shut and Friday&#x27;s settlements are the last prints available. USDA&#x27;s Crop Progress report moves to Tuesday, and the September WASDE lands on Friday 11 September.</p>
22
+ <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Contract</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Settle</th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Change</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Dec corn, CBOT</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">536¾ ¢/bu</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#8a2f2f;font-weight:bold;">−4</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Nov soybeans, CBOT</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">1309¾ ¢/bu</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#8a2f2f;font-weight:bold;">−6½</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Dec Chicago SRW wheat</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">734.00 ¢/bu</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#8a2f2f;font-weight:bold;">−20¼</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Dec Kansas City HRW wheat</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">802¼ ¢/bu</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#8a2f2f;font-weight:bold;">−13¼</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Dec Matif milling wheat</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">€246.25 /t</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#8a2f2f;font-weight:bold;">−2.50</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Dec soymeal, CBOT</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">$355.10 /t</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#8a2f2f;font-weight:bold;">−0.40</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Dec soybean oil, CBOT</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">69.27 ¢/lb</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#8a2f2f;font-weight:bold;">−77 pts</span></td></tr></tbody></table>
23
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Wheat did the work, and it did it downward: Chicago fell 50 cents on the week, Kansas City 42, Minneapolis 24¼. The rest of the board was quiet by comparison, with corn effectively unchanged on the week and beans supported by a sixth consecutive business day of flash sales — 250,600 t on Friday alone, taking the run to 1,347,600 t of soybeans booked to China and to unknown destinations.</p>
24
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The pressure on wheat came from two directions at once, and neither was a supply number. On 1 September Moscow cut its export duty on wheat, barley and corn to zero through the end of the year; the wheat duty had been RUB 787.5 a tonne. Then American envoys travelled to Moscow and Kyiv over the weekend of 5–6 September.</p>
25
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>The geopolitical read.</strong> Set both against what has not changed. More than ninety percent of Russia&#x27;s Azov–Black Sea loading capacity is still offline: all three Novorossiysk terminals suspended since mid-August, Taman since late July, Azov navigation suspended, Tuapse the only terminal working in a basin that shipped 46.3 Mt last season. Russia&#x27;s August export programme was cut to 2.7–3.1 Mt against 4.5 Mt a year earlier. None of that was repaired last week.</p>
26
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">So the transmission is not through supply. It is through expectation. A war-risk premium is a price paid for disruption a buyer thinks is coming, and diplomacy changes what he thinks is coming without mending a single loading arm. The duty cut works the same way — it does not create export capacity, it lowers the tax on whatever capacity survives, and analysts read it as three to four dollars a tonne off Russian FOB offers.</p>
27
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The evidence that this was an expectation trade rather than a supply trade is in the spread. Chicago soft red, the class that competes directly with Black Sea wheat for the same export business, fell twice as far as Minneapolis spring, which largely does not.</p>
28
+ <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="margin:6px 0 22px;"><tr><td align="center" style="border:1px solid #e3ddd2;background:#faf7f1;padding:10px;"><img src="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep16_chart1.png" width="522" alt="Wheat&#x27;s week, by class — The class that competes head-on with Black Sea wheat lost twice what spring wheat lost. The collapse was a spread, not a market. — CBOT, KCBT and MIAX settlements, week ending Friday 4 September 2026" title="Wheat&#x27;s week, by class — The class that competes head-on with Black Sea wheat lost twice what spring wheat lost. The collapse was a spread, not a market. — CBOT, KCBT and MIAX settlements, week ending Friday 4 September 2026" style="display:block;width:100%;max-width:522px;height:auto;border:0;outline:none;text-decoration:none;"></td></tr></table><ul style="margin:0 0 16px;padding-left:22px;"><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A flat price tells you a level. A <strong>spread tells you a condition</strong> — and the condition is usually the tradeable part.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Read a calendar spread as a <strong>percentage of full carry</strong>, never in cents. Fifteen cents means nothing until you know that carrying the grain costs thirty-three.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A carry spread has a <strong>ceiling and no floor</strong>. Full carry caps it, because anyone with a bin can arbitrage past that point. Nothing caps an inversion. Long the carry and short the carry are not the same trade run backwards.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">An inter-commodity spread is a <strong>distance to substitution</strong>. Wheat 27.6 percent over corn per tonne means the feed bid is nowhere near, so nothing is waiting underneath the market to catch it.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">An inter-exchange spread is an <strong>opinion, not an arbitrage</strong>. No delivery mechanism forces Paris and Chicago together, in either direction, ever.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A spread is not a smaller position. The <strong>currency arrives free</strong>, the <strong>margin credit buys size</strong>, and the correlation holding the two legs together is an assumption rather than a contract — one that tends to fail exactly when the story that created it resolves.</li></ul>
29
+ <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Term</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Meaning</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>percent of full carry</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">A calendar spread expressed as a fraction of the interest and storage cost of holding the grain to the later month — how the trade actually quotes a curve</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>bull spread</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">A calendar position long the nearer month and short the deferred, which profits when the carry narrows or the curve inverts</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>bear spread</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">A calendar position short the nearer month and long the deferred, which profits when the carry widens toward full carry</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>leg</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">One of the individual contracts making up a spread, each executed and margined in its own right</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>legging in</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Executing a spread one leg at a time rather than as a single spread order, accepting outright exposure in between in exchange for a better fill</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>spread margin credit</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The reduction in initial margin an exchange grants a recognised spread, which lowers the cost of a position without lowering its risk per tonne</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>wheat–corn spread</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The price difference between wheat and corn futures, read as the distance wheat must still fall before feeders substitute it into a ration</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>FX leg</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The currency exposure that arrives unbidden in an inter-exchange spread whose two legs settle in different currencies</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>relative value</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">A position expressing a view on the difference between two prices rather than on the direction of either</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>convergence</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The pull of a futures price toward the cash value of its deliverable as delivery approaches, which disciplines a calendar spread and has no counterpart across two exchanges</td></tr></tbody></table></td></tr>
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  <tr><td style="padding:0 28px;background:#faf7f1;"><table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0"><tr><td height="1" style="height:1px;line-height:1px;font-size:1px;background:#e3ddd2;">&nbsp;</td></tr></table></td></tr>
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- <tr><td style="padding:24px 28px 4px;background:#f4efe4;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Conversion drill 3 of 12</p><h3 style="margin:0 0 12px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">Bushels ↔ tonnes, wheat and soybeans</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Rule:</strong> 1 tonne ≈ 36.7 bushels (a bushel of wheat or soybeans is 60 lb)</p>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Fast method:</strong> tonnes → bushels: ×37 is close enough, and ×37 = ×40 minus ×3. Bushels → tonnes: ÷37, i.e. ÷40 then add 8%.</p>
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- <ul style="margin:0 0 16px;padding-left:22px;"><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">60,000 t → 2,400,000 − 180,000 = <strong>2.22 million bu</strong></li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">25,000 t → 1,000,000 − 75,000 = <strong>925,000 bu</strong> (exact 918,000)</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">500,000 bu → 12,500 + 1,000 ≈ <strong>13,600 t</strong> (exact 13,608)</li></ul>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Why it matters:</strong> the corn factor and the wheat/soybean factor differ by 7%. Using the wrong one on a cargo is a six-figure error.</p></td></tr>
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+ <tr><td style="padding:24px 28px 4px;background:#f4efe4;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Conversion drill 4 of 12</p><h3 style="margin:0 0 12px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">Cents per bushel ↔ dollars per tonne</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Rule:</strong> ¢/bu × 0.394 = $/t for corn · ¢/bu × 0.367 = $/t for wheat and soybeans</p>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Fast method:</strong> corn: ×0.4, then shave 1.5%. Wheat/soybeans: ×0.37, i.e. take a third and add a tenth of it.</p>
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+ <ul style="margin:0 0 16px;padding-left:22px;"><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Corn at 465¢ → 186 − 3 ≈ <strong>$183/t</strong></li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Soybeans at 1,182¢ → 394 + 39 ≈ <strong>$434/t</strong> (exact 434.0)</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Wheat at 651¢ → 217 + 22 ≈ <strong>$239/t</strong> (exact 239.1)</li></ul>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Why it matters:</strong> Chicago quotes cents per bushel, the rest of the world quotes dollars per tonne. Every export conversation crosses this line.</p></td></tr>
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  <tr><td style="padding:0 28px;background:#faf7f1;"><table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0"><tr><td height="1" style="height:1px;line-height:1px;font-size:1px;background:#e3ddd2;">&nbsp;</td></tr></table></td></tr>
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- <tr><td style="padding:24px 28px 4px;background:#faf7f1;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Quiz</p><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q1.</strong> A spinning mill has bought 620 lots of cotton on call against March 2027, at <em>March plus 780 points</em>. March futures were at 89.93 the day the contract was agreed. The mill takes the view that the market has run too far, waits, and ends up fixing the whole position at 93.40 shortly before first notice day.</p>
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- <ul style="margin:0 0 16px;padding-left:22px;"><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">What is the mill&#x27;s final delivered cost in cents per pound, and what is the total invoice in dollars?</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">What did the decision to wait cost, against fixing on the day the contract was agreed?</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The treasurer says: &quot;we should simply have bought 620 March futures on day one.&quot; Would that have removed the exposure — and what would the mill have been left holding at fixation?</li></ul>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q2.</strong> The CFTC on-call report of 21 August 2026 showed December 2026 carrying 30,866 lots of unfixed sales against 32,711 lots of unfixed purchases. What does that month&#x27;s balance imply about order flow still to come in December futures?</p>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q3.</strong> Brazilian hydrous ethanol parity sat at 12.60 c/lb while the No. 11 screen was at 17.56. A fund manager argues that a further rally in raw sugar will pull more Brazilian sugar out of the mills. Why is that wrong?</p>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q4.</strong> September arabica settled 36.10 cents over December on the first day of the spot contract&#x27;s delivery notice period. What does an inverse that steep say about the position of the front-month shorts?</p>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q5.</strong> <em>Conversion drill.</em> A Panamax of 44,000 t of soybeans is sold. How many bushels is that, and how many Chicago lots would hedge it?</p></td></tr>
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+ <tr><td style="padding:24px 28px 4px;background:#faf7f1;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Quiz</p><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q1.</strong> On Friday 4 September, Chicago December wheat settled at 734.00 ¢/bu and Matif December milling wheat at €246.25/t, with the euro at $1.1629. A relative-value desk thinks the European market is too dear against Chicago and sells the premium in 30,000 t: short Matif December, long CBOT December, equal tonnage. Use 36.744 bu to the tonne.</p>
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+ <ul style="margin:0 0 16px;padding-left:22px;"><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">What is the Matif premium over Chicago, in euros per tonne, at the moment the trade goes on — and how many contracts is each leg?</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Two weeks later Chicago December is 772.00 and Matif December is €243.00, with the euro at $1.1900. What is the P&amp;L on the spread, in euros?</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Of that P&amp;L, how much came from wheat and how much from the currency?</li></ul>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q2.</strong> Chicago December wheat settled at 734.00 ¢/bu and March 2027 at 749.25 ¢/bu. Money costs 5 percent and commercial storage runs 8 ¢/bu per month. What percentage of full carry is the December–March spread paying?</p>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q3.</strong> The cotton on-call report of 21 August 2026 showed March 2027 carrying 12,519 lots more unfixed sales than unfixed purchases. Does that balance represent latent buying or latent selling in March futures?</p>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q4.</strong> A coffee exporter has sold on a buyer&#x27;s-call price-to-be-fixed contract and is fully hedged with a short futures position. The market rallies thirty cents a pound before the buyer fixes, and he remains flat on price throughout. Which exposure has grown?</p>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q5.</strong> <em>Conversion drill.</em> Kansas City December hard red winter wheat settled at 802.25 ¢/bu. What is that in dollars per tonne?</p></td></tr>
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  <tr><td align="center" style="padding:20px 28px;background:#f4efe4;border-top:1px solid #e3ddd2;border-bottom:1px solid #e3ddd2;"><p style="margin:0;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:12px;font-weight:bold;letter-spacing:.12em;text-transform:uppercase;color:#8a2f2f;">Solutions below &mdash; answer first</p></td></tr>
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  <tr><td height="240" style="height:240px;line-height:240px;font-size:1px;background:#faf7f1;">&nbsp;</td></tr>
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- <tr><td style="padding:10px 28px 4px;background:#faf7f1;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Solutions</p><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A1.</strong> Work it in three steps, and keep the differential separate from the board throughout — that separation is the whole point of an on-call contract.</p>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><em>Size.</em> 620 lots × 50,000 lb = <strong>31,000,000 lb</strong>, which at 480 lb to the bale is about <strong>64,583 bales</strong>. Note the tick value that follows from it: one cent on 620 lots is 620 × $500 = <strong>$310,000</strong>.</p>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><em>The delivered cost.</em> The differential was agreed and never changes. Only the board moves.</p>
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- <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;"></th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">¢/lb</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">March futures at fixation</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">93.40</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Differential</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">+7.80</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Delivered cost</strong></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>101.20</strong></td></tr></tbody></table>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Invoice: 31,000,000 lb × $1.0120 = <strong>$31,372,000</strong>.</p>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><em>The cost of waiting.</em> Fixing on day one at 89.93 would have given 89.93 + 7.80 = 97.73 ¢/lb, and an invoice of 31,000,000 × $0.9773 = <strong>$30,296,300</strong>. The wait cost <strong>$1,075,700</strong> — which is simply the 3.47¢ rally times the $310,000-a-cent tick value. Per lot, $1,735.</p>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><em>The treasurer.</em> Yes, buying 620 March futures at 89.93 on day one would have removed the exposure exactly. That long would have gained 3.47¢ × 620 × $500 = <strong>$1,075,700</strong>, precisely offsetting the higher fixation. At fixation the mill sells the futures out and is left holding cotton at an effective delivered cost of 97.73 ¢/lb.</p>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>The trap the question is testing:</strong> the mill was never &quot;unhedged and waiting&quot;. An unfixed on-call purchase <em>is</em> a position — the mill is short the board, one for one, from the moment it takes the cotton. Doing nothing was not neutrality, it was a 620-lot short held by a company that does not consider itself a speculator. And the mill was 620 of the 19,481 lots of unfixed March sales in the market, about 3 percent of a queue of buyers all waiting for the same dip.</p>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A2.</strong> December carried <strong>net latent selling</strong>, not buying — 32,711 − 30,866 = <strong>1,845 lots</strong> more unfixed purchases than unfixed sales.</p>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The direction is the part people get backwards. An unfixed <em>sale</em> is a mill that has taken cotton and not priced it: its cost rises with the board, so it must eventually buy futures. That is latent buying. An unfixed <em>purchase</em> is a merchant who has bought from a grower with the grower holding the right to fix: that fixation is a sale. That is latent selling.</p>
52
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">So the December column says that the flow still to come in that contract leans, mildly, to the sell side — even though the market-wide total of 79,167 sales against 67,696 purchases leans to the buy side by 11,471 lots. The overhang was real, but it was not in December. It was in March (+12,519) and July 2027 (+12,651), with December 2027 running hard the other way (−18,583) because that is where growers have sold forward and not yet fixed. Reading the total and buying the front month gets the right thesis in the wrong contract.</p>
53
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A3.</strong> Because the switch is already spent. Ethanol parity is the level at which a mill earns the same per unit of ATR from sugar as from ethanol. At 17.56 against a parity of 12.60, mills are already about five cents above the point where the decision flips, so every mill that <em>can</em> make sugar is already making the maximum its crystallisation capacity allows. The mix is set at the start of the season by hardware, not by the screen.</p>
54
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Above parity, a rally therefore buys no extra Brazilian tonnes. It has only one remaining job, which is to ration demand. The price sensitivity of Brazilian supply lives <em>below</em> parity, not above it: it is a fall towards 12.60 that changes behaviour, by making ethanol the better home for the cane. A trader who models Brazilian supply as a smooth function of the sugar price will keep expecting an elasticity that has already been used up.</p>
55
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A4.</strong> It says the front-month shorts cannot deliver. A 36.10-cent inverse is the market charging an enormous price for coffee now versus coffee in three months, on the first day of the notice period — which is precisely the moment a short has to choose between tendering certified coffee and buying its position back. When the certified float is small enough (226,242 bags, under half a day of world consumption), most shorts do not have the coffee, and everyone knows it. The inverse is the price of that fact.</p>
56
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Two things follow. A carry market pays you to store and an inverse punishes you for it, so nobody with coffee is holding it back. And an inverse this steep is a statement about deliverable supply, not about world supply — the crop can be a record and the front month can still be squeezed, because only certified stock settles a contract.</p>
57
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A5.</strong> A tonne of soybeans is 36.744 bushels (60 lb to the bushel).</p>
58
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">44,000 t × 36.744 = <strong>1,616,736 bu</strong></p>
59
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">In your head: ×37 is ×40 minus ×3, so 1,760,000 − 132,000 ≈ 1,628,000 bu — close enough to quote.</p>
60
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">At 5,000 bu to a Chicago lot, 1,616,736 bu is <strong>323 lots</strong>. The trap is the corn factor: using 39.368 would give 1,732,192 bu and 346 lots, and you would be over-hedged by 23 lots.</p></td></tr>
45
+ <tr><td style="padding:10px 28px 4px;background:#faf7f1;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Solutions</p><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A1.</strong> The trade is three positions wearing the costume of two. Work each leg in its own currency and convert once, at the end — that discipline is what makes the third part of the question answerable at all.</p>
46
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><em>The premium on day one.</em> Chicago has to be dragged into Paris&#x27;s units before the two numbers can be compared.</p>
47
+ <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Step</th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Value</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">CBOT Dec</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">734.00 ¢/bu</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">× 36.744 bu/t</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">$269.70 /t</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">÷ 1.1629 $/€</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">€231.92 /t</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Matif Dec</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">€246.25 /t</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Matif premium</strong></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>€14.33 /t</strong></td></tr></tbody></table>
48
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><em>The legs.</em> 30,000 t × 36.744 = 1,102,320 bu, which at 5,000 bu a lot is <strong>220 lots</strong> of CBOT wheat. The Matif contract is 50 t, so the other leg is <strong>600 contracts</strong>. Note that 220 lots is 1,100,000 bu, or 29,937 t — the hedge does not fit the tonnage exactly, and on a spread that residual is an outright position in Chicago, small but real.</p>
49
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><em>The P&amp;L.</em> Recompute the premium on the new prices and the new rate.</p>
50
+ <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;"></th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Day one</th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Two weeks later</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">CBOT Dec</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">734.00 ¢/bu</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">772.00 ¢/bu</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">CBOT in $/t</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">$269.70</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">$283.66</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">EUR/USD</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">1.1629</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">1.1900</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">CBOT in €/t</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">€231.92</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">€238.37</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Matif Dec</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">€246.25</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">€243.00</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Premium</strong></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>€14.33</strong></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>€4.63</strong></td></tr></tbody></table>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The desk was short the premium, so it profits as the premium narrows: €14.33 − €4.63 = <strong>€9.70/t</strong>, and on 30,000 t that is <strong>€291,000</strong>.</p>
52
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><em>Wheat versus currency.</em> Hold the exchange rate at 1.1629 and run it again. Chicago at $283.66 would have been €243.93, so the premium would have gone to €243.00 − €243.93 = <strong>−€0.93</strong> — Chicago above Matif, a €15.26 narrowing, worth <strong>€457,800</strong>.</p>
53
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The euro took the difference: €457,800 − €291,000 = <strong>€166,800</strong>, more than a third of the wheat P&amp;L.</p>
54
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>The trap the question is testing:</strong> the desk put on a wheat trade and was paid in wheat and in euros, in roughly two parts to one. Long CBOT is long a dollar-denominated asset — about $8.1 million of it on 30,000 t — and the euro strengthened. Nobody sized that position, nobody approved it, and it does not appear on a wheat risk report. It arrived attached to the spread. The fix is a separate FX hedge on the euro value of the dollar leg, rolled as the leg&#x27;s value moves; the mistake is believing that a spread whose two legs are equal in tonnes is a position that is flat in anything.</p>
55
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A2.</strong> Full carry is what it costs to own the grain for the three months between the contracts.</p>
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+ <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;"></th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">¢/bu</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Interest: $7.34 at 5% for three months</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">9.18</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Storage: 8 ¢/bu × 3 months</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">24.00</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Full carry, Dec to Mar</strong></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>33.18</strong></td></tr></tbody></table>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The market is paying 749.25 − 734.00 = 15.25 ¢. So 15.25 ÷ 33.18 = <strong>46 percent of full carry</strong>.</p>
58
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Read it: the market is covering slightly under half the cost of storing wheat until March. Near full carry — above roughly 80 percent — the market is paying almost anyone to take grain off its hands, which is what a glut looks like on a curve. Under half, storing is a losing business and the market would rather the grain moved now. Forty-six percent is an ordinary, adequately supplied market with no urgency in either direction.</p>
59
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The second half of the reading is the asymmetry. That 46 percent can rise to about 100 and then stops, because past full carry anyone with an empty bin buys December, stores the wheat, sells March and collects the difference risk-free. There is no equivalent force on the way down. The spread can go to zero and invert without limit. A bear spread — short the front, long the deferred — is therefore a bounded trade; a bull spread is not.</p>
60
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A3.</strong> <strong>Latent buying</strong>, and the direction is the part that catches people.</p>
61
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">An unfixed <em>sale</em> is cotton a merchant has sold to a mill at a differential, with the mill holding the right to fix. The mill has the cotton and has not priced it, so its cost rises with the board. To stop that, it must eventually buy futures. Net 12,519 lots of unfixed sales in March 2027 is therefore 12,519 lots of buying that has to arrive in the March contract before first notice day, whatever the mills would prefer.</p>
62
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The trap is symmetry: an unfixed <em>purchase</em> — a merchant who has bought from a grower with the grower holding the right to fix — is the mirror image, and resolves as latent selling. Reading the total instead of the net, or reading the net with the sign backwards, turns a forced-buying signal into a forced-selling one.</p>
63
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A4.</strong> <strong>Credit</strong> — and, alongside it, cash.</p>
64
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">He is flat on price: the physical sale and the short futures move against each other cent for cent, which is exactly what the hedge is for. But a thirty-cent rally on a 37,500 lb Coffee C contract is 30 × 375 = <strong>$11,250 a lot</strong>, and his short hedge pays that out in variation margin, in cash, every day the market goes up. The buyer, who holds the winning side of the unfixed leg, has posted nothing at all — his gain sits as an unrealised claim against a contract, not as money in an account.</p>
65
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">That is the structure worth remembering: fixing risk is sold as market risk and settled as credit risk. The exporter&#x27;s exposure is no longer to the coffee price but to whether the buyer is still solvent and still willing to fix when the time comes — and that exposure grows by $11,250 a lot for every thirty cents the market rallies. The desk that funds the margin call is carrying the counterparty, not the market.</p>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A5.</strong> Wheat converts at 36.744 bu to the tonne, so cents per bushel become dollars per tonne by multiplying by 0.36744.</p>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">$8.0225/bu × 36.744 = <strong>$294.78 /t</strong>.</p>
68
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Mentally: take a third of 802 and add a tenth of that third — 267 + 27 ≈ 294. Close enough to quote across a desk, and worth carrying because Kansas City trades in cents while the buyer in Algeria or Nigeria is thinking in dollars a tonne.</p></td></tr>
61
69
  <tr><td style="padding:0 28px;background:#faf7f1;"><table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0"><tr><td height="1" style="height:1px;line-height:1px;font-size:1px;background:#e3ddd2;">&nbsp;</td></tr></table></td></tr>
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  <tr><td style="padding:24px 28px 4px;background:#faf7f1;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">The episode, in writing</p>
63
- <h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">The contract, and the unit under it</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">ICE Cotton No. 2 is 50,000 lb of net weight, quoted in US cents per pound. One cent is $500 a lot. One point — a hundredth of a cent — is $5.</p>
64
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Underneath it sits the <strong>bale</strong>, which is what every cotton statistic in the world uses: production, stocks, exports, mill use. A US bale is 480 lb net. So one futures lot is about 104 bales. The number is not elegant, and there is no reason for it beyond history: 480 lb is what a compressed bale weighed when the standard was written, and the trade never revisited it. The practical consequence is that a cotton desk converts between bales and pounds continuously, because the fundamentals arrive in one unit and the hedge is denominated in the other.</p>
65
- <h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">On call: the report nobody else gets</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A mill does not usually buy cotton at a price. It buys cotton <strong>on call</strong>: the differential is agreed today, the futures leg is fixed later, at a moment one side gets to choose. Structurally this is coffee&#x27;s price-to-be-fixed, and the mechanics of fixation are the same.</p>
66
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">What cotton has that coffee does not is a <strong>public tally</strong>. Every week the CFTC publishes how much cotton has been sold on call and not yet fixed, and how much has been bought on call and not yet fixed, broken down by futures month. No other soft market publishes its unfixed book.</p>
67
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The direction is where people go wrong, so it is worth stating slowly.</p>
68
- <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Position</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Who holds it</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">What fixing requires</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Latent flow</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Unfixed on-call <strong>sale</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">A merchant has sold to a mill; the mill fixes</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The mill&#x27;s cost rises with the board, so it must buy futures</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>Buying</strong></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Unfixed on-call <strong>purchase</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">A merchant has bought from a grower; the grower fixes</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The grower&#x27;s revenue rises with the board, so fixing is a sale</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>Selling</strong></td></tr></tbody></table>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A mill sitting on unfixed purchases is <strong>short the board without owning a single contract</strong>. Its cost moves one for one with December or March, and the only way out is to buy — either as a hedge now, or as the act of fixation later. Fixation is not an administrative step. It is a purchase.</p>
70
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Which means every unfixed on-call sale in that table is a buy order that has not been placed yet, and unlike a speculator&#x27;s order it has a deadline attached: first notice day.</p>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Here is what it sounds like in late January:</p>
72
- <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="margin:0 0 20px;"><tr><td style="border-left:3px solid #a8813c;padding:4px 0 4px 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.55;font-style:italic;color:#4a4238;"><strong>MILL:</strong> What&#x27;s March showing?<br><strong>MERCHANT:</strong> Ninety twenty.<br><strong>MILL:</strong> I&#x27;ll wait.<br><strong>MERCHANT:</strong> You&#x27;ve four hundred lots to fix and eleven sessions to first notice.<br><strong>MILL:</strong> Then I&#x27;ll wait ten of them.</td></tr></table>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Nobody argued about the differential. It was agreed months ago. The entire negotiation was about a calendar.</p>
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- <h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">Why it becomes a squeeze</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Take a mill holding 400 lots on call against March — 20 million pounds, roughly 41,700 bales. Every cent the board rises before it fixes costs it 400 × $500 = $200,000. Three cents is $600,000, on cotton already sitting in its own warehouse.</p>
75
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">That is a cost, not a squeeze. The squeeze is what happens when every mill reasons the same way at once.</p>
76
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Each of them waits because it believes the market will come back. So the buying does not arrive smoothly across the quarter. It arrives compressed into the last sessions before the notice period, from buyers who by then have no view left — only a deadline. A rally that began with a dry Texas summer ends with people buying because the calendar told them to, and the last stretch of it has nothing to do with cotton fundamentals at all.</p>
77
- <h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">The month is the trade</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The 21 August report showed <strong>79,167 lots of unfixed sales against 67,696 of unfixed purchases</strong> — net about 11,471 lots of latent buying. The obvious conclusion is to be long cotton. The obvious conclusion gets the contract wrong.</p>
78
- <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="margin:6px 0 22px;"><tr><td align="center" style="border:1px solid #e3ddd2;background:#faf7f1;padding:10px;"><img src="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep15_chart2.png" width="522" alt="Net unfixed on-call, by month — The overhang is not in December. It is in March and July 2027 — and December 2027 leans the other way, because that is where growers have sold forward and not yet priced. — CFTC Cotton On-Call report, week ended 21 August 2026" title="Net unfixed on-call, by month — The overhang is not in December. It is in March and July 2027 — and December 2027 leans the other way, because that is where growers have sold forward and not yet priced. — CFTC Cotton On-Call report, week ended 21 August 2026" style="display:block;width:100%;max-width:522px;height:auto;border:0;outline:none;text-decoration:none;"></td></tr></table>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">December 2026 is net <em>short</em> of buying: 30,866 sales against 32,711 purchases. The pressure sits in March 2027 (+12,519 net to buy) and July 2027 (+12,651, against almost nothing on the other side). December 2027 runs hard the other way, at −18,583, because that is the month growers use to sell a crop forward before they are willing to price it.</p>
80
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">So the report is not a flat price signal. It is a <strong>spread signal</strong>. What it argues for is long March against December, not long cotton.</p>
81
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">And there is a layer beneath even that. The purchase side of the table is the grower. Growers fix into strength; mills fix into weakness. A rally therefore summons mill buying and grower selling simultaneously, and which one dominates is a question of who is nearer a deadline — not of who is more numerous. That is the read, and it changes week to week as the calendar advances.</p>
82
- <h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">Thin is not small</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Rice and orange juice teach the second lesson, and it starts by killing an intuition.</p>
83
- <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="margin:6px 0 22px;"><tr><td align="center" style="border:1px solid #e3ddd2;background:#faf7f1;padding:10px;"><img src="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep15_chart3.png" width="522" alt="One lot, four markets — Within twenty thousand dollars of each other in notional — and orders of magnitude apart in depth. Contract size tells you almost nothing about how hard a position is to leave. — Settlements of 3 September 2026 and exchange contract specifications" title="One lot, four markets — Within twenty thousand dollars of each other in notional — and orders of magnitude apart in depth. Contract size tells you almost nothing about how hard a position is to leave. — Settlements of 3 September 2026 and exchange contract specifications" style="display:block;width:100%;max-width:522px;height:auto;border:0;outline:none;text-decoration:none;"></td></tr></table>
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- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A rough rice lot is 2,000 cwt — 200,000 lb — and at $15.70 that is $31,400. A December corn lot at 540¾ is $27,038. Wheat is $37,713, cotton $43,225. By notional these are the same instrument.</p>
85
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">They are nothing like the same instrument, because <strong>thin does not mean small. Thin means the price you get depends on how much you want.</strong> In corn, 370 lots is invisible. In rough rice, 319 lots — almost identical money — is somebody&#x27;s week.</p>
86
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The practical consequence is that a notional risk limit is the wrong control in a thin market. The right measure is <strong>days to liquidate</strong>: take the position, divide by honest daily volume, and ask how many sessions it takes to get out without being the market yourself. If the answer is more than two or three, the desk does not have a position. It has a commitment.</p>
87
- <h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">Two different kinds of thin</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Rice and juice arrive at thinness from opposite directions, and the distinction matters because it tells you what kind of shock to expect.</p>
88
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Rice is thin because most of it never moves.</strong> It is grown and eaten in the same countries; only around a tenth of world production crosses a border at all. And that traded tenth is dominated by governments — export duties, minimum export prices, licence regimes. One notification out of Delhi resets the world price faster than any monsoon.</p>
89
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">When policy is the supply curve, information does not accumulate. There is nothing, and then there is everything. That is why in rice the futures matter less than the announcements, and why a position that looked liquid on Friday can be untradeable on Monday morning.</p>
90
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Juice is thin for the opposite reason.</strong> Its supply constraint is not policy but biology, and it is one-directional. Citrus greening has been working through São Paulo for two decades; around 40 percent of a recent Brazilian crop was affected. A tree that has it does not recover. So this is not a weather premium that builds ahead of a window and decays on the calendar — it is a slow, permanent reduction in the number of producing trees. FCOJ-A on ICE is 15,000 lb of orange solids. A market that small does not absorb a fund. It gets moved by one.</p>
91
- <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Cotton, then, sits between the two. It is liquid enough to trade properly, and it publishes the one thing the thin markets never tell you: exactly how much forced buying is still to come, and in which month.</p></td></tr>
71
+ <h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">One market, two months</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The simplest spread there is: one contract, two delivery months.</p>
72
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Chicago December wheat settled at 734.00 ¢/bu on Friday. March 2027 settled at 749.25. March is 15¼ cents over December, which is another way of saying the market will pay you fifteen cents to hold the wheat for three months instead of selling it now.</p>
73
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Is fifteen cents a lot? On its own the question has no answer. It needs a yardstick, and the yardstick is what holding the wheat actually costs: money and space.</p>
74
+ <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;"></th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">¢/bu</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Interest on $7.34 at 5%, three months</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">9.18</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Commercial storage, 8 ¢/bu/month</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">24.00</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Full carry</strong></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>33.18</strong></td></tr></tbody></table>
75
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Fifteen and a quarter against thirty-three and a fifth is <strong>46 percent of full carry</strong>, and that is the number a desk actually says out loud. Nobody quotes the December–March at fifteen and a quarter. They say it is at forty-six percent of carry, because the percentage travels between commodities and across years while the cents do not.</p>
76
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The reading is direct. Near full carry, the market is desperate for someone to store grain — supply has arrived faster than demand can absorb it, and the curve is bidding for bin space. Below about half, storage is a losing proposition and the market is asking for the grain now. Forty-six percent describes an unexceptional market: enough wheat, no emergency, no glut.</p>
77
+ <h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">The asymmetry that makes a carry trade dangerous backwards</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Here is what the percentage hides. The spread has a ceiling and no floor.</p>
78
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">It cannot travel far past full carry, because if it did the trade would be free: buy December, put the wheat in a bin, sell March, deliver, and collect the excess over your costs. That arbitrage is available to every commercial with storage, so it caps the carry in practice.</p>
79
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Nothing whatsoever caps the other direction. A carry can narrow to zero and then invert, and it can keep inverting for as long as somebody needs the grain in front of them more than they need it later. There is no counter-trade, because you cannot borrow wheat out of the future.</p>
80
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">So the two sides of the same instrument are not mirror images:</p>
81
+ <ul style="margin:0 0 16px;padding-left:22px;"><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Bear spread</strong> — short the front, long the deferred. Bounded. The most you can lose is the distance to full carry.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Bull spread</strong> — long the front, short the deferred. Unbounded. An inversion has no theoretical limit.</li></ul>
82
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Desks that blow up on calendar spreads almost always blow up on the second one, having sized it as though it behaved like the first.</p>
83
+ <h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">Paris, leaning the other way</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Now the same instrument in Europe. Matif December milling wheat settled at €246.25/t, March at €244.50. December is €1.75 <em>over</em> March.</p>
84
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">There is no percent of carry to compute, because the carry is negative. The market is not paying anyone to store wheat. It is charging them. In plain terms, Europe wants wheat now rather than in March — which is what you would expect of the origin that has to serve the buyers the Black Sea currently cannot.</p>
85
+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Two curves, the same grain, the same Friday, leaning in opposite directions.</p>
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+ <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="margin:6px 0 22px;"><tr><td align="center" style="border:1px solid #e3ddd2;background:#faf7f1;padding:10px;"><img src="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep16_chart2.png" width="522" alt="Two wheat curves, opposite shapes — Chicago pays you to wait and Paris charges you for it. Rebased to December, the American curve rises across the year and the European one falls away. — CBOT settlements (USDA AMS) and Euronext milling wheat settlements, Friday 4 September 2026" title="Two wheat curves, opposite shapes — Chicago pays you to wait and Paris charges you for it. Rebased to December, the American curve rises across the year and the European one falls away. — CBOT settlements (USDA AMS) and Euronext milling wheat settlements, Friday 4 September 2026" style="display:block;width:100%;max-width:522px;height:auto;border:0;outline:none;text-decoration:none;"></td></tr></table>
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+ <h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">Two crops, one month</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The second axis. December wheat at 734.00 against December corn at 536¾ is a spread of 197¼ ¢/bu — wheat is nearly two dollars a bushel over corn.</p>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Cents per bushel is the wrong unit for that comparison, because a bushel of wheat and a bushel of corn are not the same weight. Corn converts at 39.368 bu to the tonne, wheat at 36.744. On a tonne:</p>
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+ <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;"></th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">$/t</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Dec wheat</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">269.70</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Dec corn</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">211.31</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Wheat over corn</strong></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>58.39, or 27.6%</strong></td></tr></tbody></table>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">That number has a use. Wheat has a second life as animal feed, and when it gets cheap enough relative to corn, feeders substitute it into the ration. That substitution is the demand that switches on underneath a falling wheat price — the closest thing wheat has to a floor.</p>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">It switches on near parity per tonne, a little above if anything, since wheat carries more protein. Twenty-eight percent over corn is not near parity. So the spread is saying something specific this morning: wheat is still trading as food, and there is no feed bid waiting below it. On a week when wheat fell fifty cents, that is worth knowing.</p>
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+ <h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">Two exchanges, and a currency nobody ordered</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The third axis is the hard one, because the two markets are not quoted in the same anything. Chicago is cents per bushel. Paris is euros per tonne. Getting them into one number takes two steps and introduces a third position.</p>
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+ <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Step</th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Value</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">CBOT Dec wheat</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">734.00 ¢/bu</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">× 36.744 bu/t</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">$269.70 /t</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">÷ €1 = $1.1629</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">€231.92 /t</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Matif Dec</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">€246.25 /t</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Matif over Chicago</strong></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>€14.33 /t</strong></td></tr></tbody></table>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Here is how it gets quoted on a desk:</p>
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+ <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="margin:0 0 20px;"><tr><td style="border-left:3px solid #a8813c;padding:4px 0 4px 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.55;font-style:italic;color:#4a4238;"><strong>TRADER:</strong> Where&#x27;s Matif–Chicago December?<br><strong>BROKER:</strong> Fourteen and a third. Paris over.<br><strong>TRADER:</strong> It was under eight a fortnight ago.<br><strong>BROKER:</strong> It was. Chicago&#x27;s done the moving, not us.<br><strong>TRADER:</strong> Show me thirty in Dec. Sell the premium.<br><strong>BROKER:</strong> Thirty, Paris over Chicago, working.</td></tr></table>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Neither of them said whether wheat was going up or down. They quoted one number — the difference — and the trader sold it. He has no view on the wheat price. He has a view on whether Paris and Chicago move apart or together. That is relative value, and it is where physical desks live, because a physical desk very rarely has a flat-price opinion worth acting on.</p>
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+ <h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">Why €14.33 is not an arbitrage</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The instinct is to treat a gap that size as free money: buy the cheap market, sell the dear one, wait for convergence. Run it both directions and the instinct dies.</p>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Buy Chicago, sell Paris.</strong> To collect the €14.33 you would have to deliver wheat against the Matif contract. Matif delivers French milling wheat into French silos, against a specification — around 11 percent protein, a specific weight, a falling number. American soft red winter does not meet it, and it is on the wrong side of an ocean.</p>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Sell Chicago, buy Paris.</strong> Now you need French wheat sitting in a registered warehouse in the Toledo delivery territory. Same ocean, opposite direction, against a spread worth about $16.67 a tonne. Transatlantic freight alone is several times that before anyone has paid for elevation.</p>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">So no delivery mechanism forces these two prices together, in either direction. That is the structural difference between the three spreads in this episode:</p>
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+ <ul style="margin:0 0 16px;padding-left:22px;"><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A <strong>calendar spread</strong> inside one contract is disciplined by delivery. Convergence is enforced.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">An <strong>inter-commodity spread</strong> is disciplined by substitution. Feeders enforce it, eventually, with real demand.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">An <strong>inter-exchange spread</strong> is disciplined by nothing but the habits of the people trading it. It can widen for six months for no nameable reason, and there is no date on which anyone is obliged to make it stop.</li></ul>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The shape of the premium tells you what it is really pricing.</p>
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+ <table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="margin:6px 0 22px;"><tr><td align="center" style="border:1px solid #e3ddd2;background:#faf7f1;padding:10px;"><img src="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep16_chart3.png" width="522" alt="What Paris pays over Chicago — Fourteen euros in December, five by May. The premium is dated: it is a price for how long the market expects the Black Sea to stay broken, not a gap waiting to be arbitraged. — Derived from CBOT and Euronext settlements of 4 September 2026, at 36.744 bu/t and EUR/USD 1.1629" title="What Paris pays over Chicago — Fourteen euros in December, five by May. The premium is dated: it is a price for how long the market expects the Black Sea to stay broken, not a gap waiting to be arbitraged. — Derived from CBOT and Euronext settlements of 4 September 2026, at 36.744 bu/t and EUR/USD 1.1629" style="display:block;width:100%;max-width:522px;height:auto;border:0;outline:none;text-decoration:none;"></td></tr></table>
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+ <h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">Three ways a spread is bigger than the outright it replaced</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A spread sounds safer. Two legs, they offset, the market risk is out. On a desk it is how people lose more money than they ever lost on outrights, for three reasons that compound.</p>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>One: the currency arrives free.</strong> Long Chicago and short Paris on 30,000 t is not two positions, it is three. The Chicago leg is worth about $8.1 million, denominated in dollars, and the book is in euros. Nobody sized that exposure or approved it. It came attached to the spread, and it does not show up on a wheat risk report. In the worked example above it took €166,800 of a €457,800 wheat profit.</p>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Two: the exchange helps you make it bigger.</strong> A recognised spread earns a margin credit, frequently 70 to 80 percent off the outright requirement. The same margin that carried a hundred lots outright carries four hundred lots of spread. Risk per tonne fell; tonnes rose by more. That is not risk reduction, it is leverage wearing a hedge&#x27;s clothes — and it is granted automatically, by a clearing system, to a desk that believes it has just become more conservative.</p>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Three: the correlation is an assumption, not a contract.</strong> Chicago and Paris moved together through August because one story was driving both. Then Moscow zeroed its export duty — and Russian wheat competes with French wheat for North African business far more directly than it competes with American wheat. The story that made the two markets move together is precisely the story whose resolution pulls them apart.</p>
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+ <p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">That is the general form, and it is worth stating plainly: a spread is correlated right up until the moment it matters. The event that resolves the thesis is usually the same event that breaks the relationship the position depended on. Which is why the honest way to size a spread is not &quot;these two legs offset&quot; but &quot;what do I lose if they stop offsetting on the day I find out I was right?&quot;</p></td></tr>
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  <tr><td style="padding:0 28px;background:#faf7f1;"><table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0"><tr><td height="1" style="height:1px;line-height:1px;font-size:1px;background:#e3ddd2;">&nbsp;</td></tr></table></td></tr>
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- <tr><td style="padding:24px 28px 4px;background:#faf7f1;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Glossary</p><p style="margin:0;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.6;color:#4a4238;">Every unit and expression the show has introduced lives on the episode page, and it stays up to date. <a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep15.html#glossary" style="color:#1d4032;">Open the glossary &rarr;</a></p></td></tr>
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- <tr><td style="padding:22px 28px 30px;background:#ece7db;border-top:1px solid #e3ddd2;"><p style="margin:0 0 6px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:12px;line-height:1.7;color:#4a4238;"><strong>Soft Commodity Trading</strong> &mdash; a daily briefing on physical commodity trading.</p><p style="margin:0;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:12px;line-height:1.7;color:#8b8375;"><a href="https://storage.googleapis.com/podcast-audio-2647223968/index.html" style="color:#4a4238;">All episodes</a> &nbsp;·&nbsp; <a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/feed.xml" style="color:#4a4238;">Subscribe by RSS</a> &nbsp;·&nbsp; <a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep15.html" style="color:#4a4238;">This episode online</a></p></td></tr>
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+ <tr><td style="padding:24px 28px 4px;background:#faf7f1;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Glossary</p><p style="margin:0;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.6;color:#4a4238;">Every unit and expression the show has introduced lives on the episode page, and it stays up to date. <a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep16.html#glossary" style="color:#1d4032;">Open the glossary &rarr;</a></p></td></tr>
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+ <tr><td style="padding:22px 28px 30px;background:#ece7db;border-top:1px solid #e3ddd2;"><p style="margin:0 0 6px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:12px;line-height:1.7;color:#4a4238;"><strong>Soft Commodity Trading</strong> &mdash; a daily briefing on physical commodity trading.</p><p style="margin:0;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:12px;line-height:1.7;color:#8b8375;"><a href="https://storage.googleapis.com/podcast-audio-2647223968/index.html" style="color:#4a4238;">All episodes</a> &nbsp;·&nbsp; <a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/feed.xml" style="color:#4a4238;">Subscribe by RSS</a> &nbsp;·&nbsp; <a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep16.html" style="color:#4a4238;">This episode online</a></p></td></tr>
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