How come in 1997 when Warren Buffet, who actually stood for delivery, the market did not rally until AFTER the spreads backwardated all the way to spot? Yet in 2011, the market had rallied already, and all of a sudden spreads (literally overnight duiring asian and london hours) went into backwardation? In a real market, the spread activity predicts the physical demand before the flat price does. You see the spot price start to act squirrelly to the front month future in the EFP. There are exceptions to this. But it is rare.