Re: What moves KC price?
The ICE market is used for hedging purposes more than you think. It has been explained that by means of EFP/EFS hedges are converted to physical at notice season. By looking at the depth of market presently we see resting bids all the way down extending to Dec22. Many of these bids are roaster/merchant/processor. Of course, deliveries are sellers option and so EFP are implemented. My view is that ICE is a viable market and prices represent reality and adjusted as dictated by going differentials. Producers also use ICE and rakee advantage of forward premiums together with the Selic. A Brazilian producer can hedge anticipated production very far forward and receive a very nice return.
That is kind of what I was trying to say about using the market for physical pricing.Your explanation is somewhat better.
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