By Sumit Roy
Last week’s plunge in crude oil gives investors an opportunity to buy at cheaper prices, but at the expense of a less favorable forward curve. Has oil moved into backwardation yet? What does corn’s roll yield look like? How do you know when it’s time to buy or sell?
Each week, we investigate the futures curves of the U.S.’ most important commodities, helping investors better understand the market and seize buy-and-sell opportunities as soon as they arise. To see current contango curve and front-month roll costs for each of our selected commodities, please select a sector or commodity below (or read the whole report):
Data as of close on June 24
Data courtesy IndexUniverse.com
Energy | Agricultural Commodities |
Precious Metals | Soft Commodities |
Industrial Metals |
Energy
WTI’s contango widened as prices plunged last week.
Front-month annualized roll costs moved from 4.74 percent to 7.76 percent.
Bottom Line: Contango
Brent moved into contango for the first time since February after prices plunged following last week’s surprise IEA decision.
Investors now pay 1.72 percent annualized to roll Brent contracts, compared with last week, when they net 5.27 percent.
Bottom Line: Contango
The shape of the natural gas forward curve flattened in the prior week.
Annualized roll costs almost halved to 6.1 percent from 11.31 percent.
Bottom Line: Contango
Precious Metals
The gold contango expanded slightly last week as prices moved lower.
Annualized front-month roll costs moved to 1.04 percent from 0.78 percent.
Bottom Line: Mild Contango
Silver moved into mild contango at the front end of the forward curve.
Annualized roll costs increased to 0.7 percent from 0.0 percent.
Bottom Line: Flat/Mild Contango
Platinum’s contango narrowed last week.
Annualized roll costs halved from 3.82 percent to 1.86 percent.
Bottom Line: Contango
Palladium switched from mild backwardation to contango last week.
In turn, annualized roll costs moved up to 3.67 percent.
Bottom Line: Contango
Industrial Metals
The shape of copper’s forward curve didn’t change much last week.
Annualized copper roll costs are a very modest 0.07 percent.
Bottom Line: Mild Contango/Flat
The aluminum forward curve remains in steady contango through the one-year forward curve.
Front-month annualized roll costs edged up to 5.06 percent from 4.21 percent.
Bottom Line: Steady Contango
Like aluminum, zinc remains in steady contango throughout the entire forward curve.
Zinc roll costs rose slightly to 4.09 percent annualized from 3.48 percent.
Bottom Line: Steady Contango
The shape of the lead forward curve was essentially unchanged last week.
Investors net 1.42 percent annualized from rolling lead contracts, down from 1.46 percent last week.
Bottom Line: Contango to Backwardation
The nickel forward curve is in mild contango at the front end before it shifts into steady backwardation thereafter.
Investors pay a 0.49 percent annualized cost to roll front-month nickel contracts, slightly lower than last week.
Bottom Line: Mild Contango to Mild Backwardation
The shape of the tin forward curve was little changed week-over-week.
Front-month roll costs increased to a still-modest 1.05 percent from 0.92 percent last week.
Bottom Line: Mild Contango
Agricultural Commodities
The shape of the corn forward curve was little changed last week.
Investors net an attractive 20.95 percent from rolling front-month corn contracts, up from 20.49 percent last week.
Bottom Line: Steep Backwardation to Contango
Wheat’s contango narrowed significantly last week.
Wheat’s annualized front-month roll costs moved to 59.58 percent from 86.22 percent.
Bottom Line: Steep Contango
Soybeans moved back into backwardation last week.
Investors now net 4.67 percent annualized from rolling front-month soybeans contracts, better than last week, when it cost 0.45 percent.
Bottom Line: Backwardation to Contango to Backwardation
The live cattle curve remains in contango throughout the vast majority of the one-year forward curve.
Annualized live cattle roll costs rose slightly to 2.15 percent from 1.51 percent.
Bottom Line: Contango
The shape of the lean hogs forward curve was essentially unchanged last week.
Investors still net an extremely attractive 59.3 percent from rolling front-month lean hogs contracts.
Bottom Line: Steep Backwardation
Soft Commodities
The coffee forward curve flattened in the prior week.
Annualized front-month roll costs for coffee halved to 7.47 percent from 15.15 percent.
Bottom Line: Contango
The cocoa forward curve is back in contango at the very front end.
Investors pay 2.46 percent annualized to roll front-month cocoa contracts, up from 0.00 percent last week.
Bottom Line: Contango
Backwardation in the sugar forward curve widened significantly last week.
Investors net a very attractive 49.87 percent from rolling front-month sugar contracts, up from 36.82 percent last week.
Bottom Line: Steep Backwardation
Cotton’s backwardation widened to extremely steep levels.
Investors net a whopping 95.78 percent from rolling front-month cotton contracts, up from 74.37 percent last week.
Bottom Line: Steep Backwardation
