[Verse 1] Farmer John plants corn beneath the summer sky September harvest promised, but the market's sly Today's spot price is fifty, futures show fifty-three Why this gap between them? Let's unravel the mystery Storage costs pile up like autumn leaves Warehousing, insurance, interest that never sleeves Convenience yield flows back when stocks run thin Premium theory balances what goes out and in [Chorus] Insurance, hedging, storage - three theories in the mix Premium for protection when the market's playing tricks Contango climbing upward, backwardation drops below Spot and futures dancing to the rhythm that they know [Verse 2] Hedgers flood the market, short positions everywhere Producers seeking shelter from the price despair Speculators step in, demanding compensation sweet Risk premium theory makes the puzzle feel complete When inventory's plentiful, convenience fades away Storage costs dominate the pricing game we play But scarcity brings power to the stocks you hold today Convenience yield can flip the curve the other way [Chorus] Insurance, hedging, storage - three theories in the mix Premium for protection when the market's playing tricks Contango climbing upward, backwardation drops below Spot and futures dancing to the rhythm that they know [Bridge] Normal backwardation when the hedgers take control Keynes observed the pattern, risk premium takes its toll But storage theory shows us curves can twist and bend Convenience versus carrying costs - on this we can depend [Outro] Three theories paint the picture of why prices never match Insurance, pressure, storage costs - now you've got the catch Futures pricing mysteries solved with economic sight Spot and forward markets finally brought into the light
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