Grains Threaten to Rally, Flop at the Close

The wheat market spent most of the day in positive territory, with the Euro marginally up and equities at least not falling too much. A sell-off in the last 5 minutes put the market back to unchanged.

Calendar spreads remained at very steep contangos and intermarket futures spreads favored harder wheat over softer wheat-July MGE in particular touched new highs against the CBOT.

Despite the same factors driving the market, I am still more cautious than a month ago. Sure the strong USD should knock wheat down, but wheat is down 15% in the last month on a 10% move in the Euro. The only other bearish development has been the good weather- but with the big inventory, the market never priced in much,if any, weather risk anyway.