Carry means to add or deduct to the contract price, based on the date that the buyer receives the delivery.
Carry has 3 components:
- It is calculated in a dollar amount (either positive or negative) per mt
- The frequency it is applied can either be daily, weekly or monthly from the chosen carry start date
- Carry is incurred at 12:00:01 am on the chosen start date and subsequent occurring dates depending on the frequency
For example:
A contract has a delivery period from the 15th March until the 30th May, with a monthly carry fee of $1.50 and a start date of 1st April.
If a delivery was allocated (transferred) onto that contract on the 10th May, then it will have incurred two carry adjustments totalling $3.00, the first on the 1st April and the second on the 1st May.
If a delivery was allocated (transferred) onto that contract on the 1st May, then it will still incur two carry adjustments totalling $3.00, the first on the 1st April and the second on the 1st May (as the carry is incurred at 12:00:01am on that day).
If a delivery was allocated (transferred) onto that contract on the 28th April, it will only incur one carry adjustment totalling $1.50, applied on the 1st of April.
More information on Contract carry here.