Reports of Chinese corn buying, along with higher gold and bullish equity markets gave wheat futures a lift to the upside for the first 15 minutes of trading today. Then reality set in. Wheat pulled back to unchanged and then 1/2-1% lower. All the bullish noises in the background can't counteract the strongly negative effects of a higher USD and big wheat inventories waiting for export.
Part of the hard wheat vs soft wheat gains we had yesterday were given back, but not all. July MGE is 36-38 cents over CBOT and July KC has about a 15 cent premium to CBOT. These spreads are both within a nickel of the highest levels in many months. With a substantial number of the trend-followers now out of their short CBOT positions, I am looking for CBOT weakness to resume and for these spreads to make new highs.
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