Contango Reports

Contango Report: Brent’s Backwardation Widens
By Sumit Roy | October 15, 2012

Featured Commodity

CONTANGO WATCH: Brent's backwardation widened last week as prices rose to three-week highs. The European oil benchmark remains superior to its U.S. counterpart, WTI, for investors looking for exposure to crude prices.

In addition to upside from a potential rise in front-month prices, investors gain an annualized roll yield of 11 percent by holding Brent contracts and rolling them over. That's in contrast to WTI, where it costs more than 5 percent to roll front-month contracts.

ROLL COSTS: Investors net 11.07 percent annualized from rolling front-month Brent contracts, up from a net of 8.30 percent.

BOTTOM LINE: Backwardation

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 most important commodities in the U.S., helping investors better understand the market and seize buy-and-sell opportunities as soon as they arise. For an easy-to-understand explanation of contango, backwardation and roll yields, please click here to go to our Hard Assets University.

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 Oct. 12, 2012
Data courtesy IndexUniverse.com

Energy

Agricultural Commodities

Precious Metals

Soft Commodities

Industrial Metals

		Current Roll	Previous Week's Roll	Past Year Average Roll	Historical 10/12 5YR Annualized Roll
Energy	WTI	5.63%	5.41%	0.31%	6.65%
	Brent	-11.07%	-8.30%	-0.55%	3.11%
	HH Natural Gas	142.05%	177.89%	3.40%	242.76%
Precious Metals	Gold	0.62%	0.64%	0.13%	1.08%
	Silver	1.27%	-10.90%	0.14%	1.43%
	Platinum	-0.10%	0.09%	0.25%	1.12%
	Palladium	-0.31%	0.62%	0.25%	1.40%
Industrial Metals	Copper	0.22%	0.14%	-0.01%	0.71%
	Aluminum	7.35%	6.46%	0.53%	7.42%
	Zinc	8.30%	6.29%	0.15%	5.82%
	Lead	-0.56%	0.00%	0.29%	3.14%
	Nickel	1.49%	1.32%	0.10%	2.33%
	Tin	-0.56%	0.27%	0.04%	-2.70%
Agricultural Commodities	Corn	-0.27%	0.14%	-1.31%	9.11%
	Wheat	5.52%	5.11%	2.16%	16.75%
	Soybeans	-0.30%	-1.07%	-0.22%	4.33%
	Live Cattle	19.88%	18.11%	1.28%	11.38%
	Lean Hogs	58.74%	51.08%	0.81%	54.24%
Soft Commodities	Coffee C	11.66%	9.63%	1.14%	9.45%
	Cocoa	2.58%	2.38%	0.75%	3.80%
	Sugar #11	-0.89%	-1.39%	-0.72%	-14.17%
	Cotton #2	3.06%	4.83%	-0.21%	8.16%

Energy

WTI

Current Annualized Cost
5.63%
Annualized Cost 1 Week Previous
5.41%
Historical 10/12 5YR Annualized Roll
6.65%
Contract Months:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

RCWTI

CONTANGO WATCH: WTI is in contango across most of the one-year forward curve.

ROLL COSTS: It costs investors 5.63 percent annualized to roll front-month WTI contracts, up slightly from a cost of 5.41 percent.

BOTTOM LINE: Contango

Brent

Current Annualized Cost
-11.07%
Annualized Cost 1 Week Previous
-8.30%
Historical 10/12 5YR Annualized Roll
3.11%
Contract Months:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

RCBrent

HH Natural Gas

Current Annualized Cost
142.05%
Annualized Cost 1 Week Previous
177.89%
Historical 10/12 5YR Annualized Roll
242.76%
Contract Months:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

RCHH

CONTANGO WATCH: The natural gas contango narrowed, but remained in steep contango as is typical during this time of the year.

ROLL COSTS: It costs investors 142.05 percent annualized to roll front-month natural gas contracts, down from a cost of 177.89 percent.

BOTTOM LINE: Steep Contango

Precious Metals

Gold

Current Annualized Cost
0.62%
Annualized Cost 1 Week Previous
0.64%
Historical 10/12 5YR Annualized Roll
1.08%
Contract Months:
Feb Apr Jun Aug Oct Dec

RCGold

CONTANGO WATCH: Gold is in mild contango.

ROLL COSTS: It costs investors 0.62 percent annualized to roll front-month gold contracts, down slightly from a cost of 0.64 percent.

BOTTOM LINE: Mild Contango

Silver

Current Annualized Cost
1.27%
Annualized Cost 1 Week Previous
-10.90%
Historical 10/12 5YR Annualized Roll
1.43%
Contract Months:
Jan Mar May Jul Sep Dec

RCSilver

CONTANGO WATCH: Silver is in mild contango at the front end of the forward curve.

ROLL COSTS: It costs investors 1.27 percent annualized to roll front-month silver contracts, down from a net of 10.90 percent.

BOTTOM LINE: Contango

Platinum

Platin

Current Annualized Cost
-0.10%
Annualized Cost 1 Week Previous
0.09%
Historical 10/12 5YR Annualized Roll
1.12%
Contract Months:
Jan Apr Jul Oct

RCPlatin

CONTANGO WATCH: The platinum forward curve is close to flat at the very front end of the curve.

ROLL COSTS: Investors net 0.1 percent annualized from rolling front-month platinum contracts, up from a cost of 0.09 percent.

BOTTOM LINE: Flat to Mild Contango

Palladium

Pallad

Current Annualized Cost
-0.31%
Annualized Cost 1 Week Previous
0.62%
Historical 10/12 5YR Annualized Roll
1.40%
Contract Months:
Mar Jun Sep Dec

RCPallad

CONTANGO WATCH: Palladium is in mild backwardation at the very front end of the curve and contango thereafter.

ROLL COSTS: Investors net 0.31 percent annualized from rolling front-month palladium contracts, up from a cost of 0.62 percent.

BOTTOM LINE: Mild Backwardation to Mild Contango

Industrial Metals

Copper

Current Annualized Cost
0.22%
Annualized Cost 1 Week Previous
0.14%
Historical 10/12 5YR Annualized Roll
0.71%
Contract Months:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

RCCopper

CONTANGO WATCH: Copper is in mild contango throughout the one-year forward curve.

ROLL COSTS: It costs investors 0.22 percent annualized to roll front-month copper contracts, up from a cost of 0.14 percent.

BOTTOM LINE: Mild Contango

Aluminum

Alum

Current Annualized Cost
7.35%
Annualized Cost 1 Week Previous
6.46%
Historical 10/12 5YR Annualized Roll
7.42%
Contract Months:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

RCAlum

CONTANGO WATCH: The aluminum forward curve is in steady contango.

ROLL COSTS: Front-month roll costs fell to 7.35 percent annualized, up from a cost of 6.46 percent.

BOTTOM LINE: Contango

Zinc

Current Annualized Cost
8.30%
Annualized Cost 1 Week Previous
6.29%
Historical 10/12 5YR Annualized Roll
5.82%
Contract Months:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

RCZinc

CONTANGO WATCH: Zinc is in contango across the one-year forward curve.

ROLL COSTS: It costs investors 8.3 percent annualized to roll front-month zinc contracts, up from a cost of 6.29 percent.

BOTTOM LINE: Contango

Lead

Current Annualized Cost
-0.56%
Annualized Cost 1 Week Previous
0.00%
Historical 10/12 5YR Annualized Roll
3.14%
Contract Months:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

RCLead

CONTANGO WATCH: Lead is in mild backwardation at the front end of the curve and mild contango thereafter.

ROLL COSTS: Investors net 0.56 percent annualized from rolling front-month lead contracts from zero.

BOTTOM LINE: Mild Backwardation to Mild Contango

Nickel

Current Annualized Cost
1.49%
Annualized Cost 1 Week Previous
1.32%
Historical 10/12 5YR Annualized Roll
2.33%
Contract Months:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

RCNickel

CONTANGO WATCH: Nickel is in mild contango throughout the forward curve.

ROLL COSTS: Roll costs for nickel edged up to 1.49 percent from 1.32 percent.

BOTTOM LINE: Mild Contango

Tin

Current Annualized Cost
-0.56%
Annualized Cost 1 Week Previous
0.27%
Historical 10/12 5YR Annualized Roll
-2.70%
Contract Months:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

RCTin

CONTANGO WATCH: The tin forward curve is in mild backwardation across the one-year forward curve.

ROLL COSTS: Investors net 0.56 percent annualized from rolling front-month tin contracts, up from a cost 0f 0.27 percent.

BOTTOM LINE: Mild Backwardation

Agricultural Commodities

Corn

Current Annualized Cost
-0.27%
Annualized Cost 1 Week Previous
0.14%
Historical 10/12 5YR Annualized Roll
9.11%
Contract Months:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

RCCorn

CONTANGO WATCH: Corn is in backwardation across the one-year forward curve.

ROLL COSTS: Investors net 0.27 percent annualized from rolling front-month corn contracts, up from a cost of 0.14 percent.

BOTTOM LINE: Backwardation

Wheat

Current Annualized Cost
5.52%
Annualized Cost 1 Week Previous
5.11%
Historical 10/12 5YR Annualized Roll
16.75%
Contract Months:
Mar May Jul Sep Dec

RCWheat

CONTANGO WATCH: Wheat's contango widened slightly last week.

ROLL COSTS: Wheat's annualized front-month roll costs rose to 5.52 percent from 5.11 percent.

BOTTOM LINE: Contango to Backwardation

Soybeans

SoyB

Current Annualized Cost
-0.30%
Annualized Cost 1 Week Previous
-1.07%
Historical 10/12 5YR Annualized Roll
4.33%
Contract Months:
Jan Mar May Jul Aug Sep Nov

RCSoyB

CONTANGO WATCH: Soybeans is in backwardation across the one-year forward curve.

ROLL COSTS: Investors net 0.3 percent annualized from rolling front-month soybeans contracts, down from a cost of 1.07 percent.

BOTTOM LINE: Backwardation

Live Cattle

LiveC

Current Annualized Cost
19.88%
Annualized Cost 1 Week Previous
18.11%
Historical 10/12 5YR Annualized Roll
11.38%
Contract Months:
Feb Apr Jun Aug Oct Dec

RCLiveC

CONTANGO WATCH: Live cattle curve is in contango across most of the one-year forward curve.

ROLL COSTS: It costs investors 19.88 percent annualized to roll front-month live cattle contracts, up from a cost of 18.11 percent.

BOTTOM LINE: Contango

Lean Hogs

LeanH

Current Annualized Cost
58.74%
Annualized Cost 1 Week Previous
51.08%
Historical 10/12 5YR Annualized Roll
54.24%
Contract Months:
Feb Apr May Jun Jul Aug Oct Dec

RCLeanH

CONTANGO WATCH: The front end of the lean hogs forward curve is in contango, while the back end is in backwardation.

ROLL COSTS: It costs investors 58.74 percent annualized to roll front-month lean hogs contracts, up from a cost of 51.08 percent.

BOTTOM LINE: Contango to Backwardation

Soft Commodities

Coffee C

Coffee

Current Annualized Cost
11.66%
Annualized Cost 1 Week Previous
9.63%
Historical 10/12 5YR Annualized Roll
9.45%
Contract Months:
Mar May Jul Sep Dec

RCCoffee

CONTANGO WATCH: Coffee is in contango throughout the one-year forward curve.

ROLL COSTS: It costs investors 11.66 percent annualized to roll front-month coffee contracts, up from a cost of 9.63 percent.

BOTTOM LINE: Contango

Cocoa

Current Annualized Cost
2.58%
Annualized Cost 1 Week Previous
2.38%
Historical 10/12 5YR Annualized Roll
3.80%
Contract Months:
Mar May Jul Sep Dec

RCCocoa

CONTANGO WATCH: Cocoa is in contango across most of the one-year forward curve.

ROLL COSTS: It costs investors 2.58 percent annualized to roll front-month cocoa contracts, up slightly from 2.38 percent.

BOTTOM LINE: Contango

Sugar #11

Sugar

Current Annualized Cost
-0.89%
Annualized Cost 1 Week Previous
-1.39%
Historical 10/12 5YR Annualized Roll
-14.17%
Contract Months:
Mar May Jul Oct

RCSugar

CONTANGO WATCH: Sugar is in mild backwardation at the front end of the curve.

ROLL COSTS: Investors net 0.89 percent annualized from rolling front-month sugar contracts, down from 1.39 percent.

BOTTOM LINE: Mild Backwardation to Contango

Cotton #2

Cotton

Current Annualized Cost
3.06%
Annualized Cost 1 Week Previous
4.83%
Historical 10/12 5YR Annualized Roll
8.16%
Contract Months:
Mar May Jul Oct Dec

RCCotton

CONTANGO WATCH: Cotton is in contango throughout the one-year forward curve.

ROLL COSTS: It costs investors 3.06 percent annualized to roll front-month cotton contracts, down from a cost of 4.83 percent.

BOTTOM LINE: Contango