The three-month copper contract is trading near record highs on the London Metal Exchange, cash prices are rising even faster, and inventories are descending toward zero. Try running a hedge book in those conditions.
It's been a very real quandary facing the physical trade and industry, which awoke on Tuesday October 19 to find copper's cash to November spread had flared to a backwardation of more than $1,010 per tonne. The spread has since moved back to near where it started 24 hours earlier, but the potential impact of that kind of price swing on the bottom line of a hedger is immense.To be clear: There's absolutely nothing illegal...