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More on the spot and forward price commodity disconnect

Posted on 06 March 2013

An excellent observation from John Kemp over at Reuters on Tuesday regarding the spot/forward disconnect we’ve been talking about: The increasingly close linkage between hedge funds and spot prices since 2010 has also coincided with a sharp reduction in the correlation between front-month and far-forward prices. Correlation between spot month and forward prices, generally above 90 percent until 2010, is now often less than 50 percent.
Now the spot and forward markets have become almost entirely separated. Something has clearly changed in the way the futures market works. Hedge funds and other money managers are the prime candidates………………………………………..Full Article: Source


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VRS - who has written 39000 posts on Opalesque Commodities Briefing.


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