Strange Closing Action

Okay, there were buyers of wheat on the close, no surprise there. But as the Sep contract traded up to the highs, interest came into the calendar spreads to sell the front/buy the back, pushing Dec/July to a 4 cent steeper contango in just a few minutes.

Generally, this is what I expect on the calendar spreads-- though not while the market is sprinting higher. Since Sep MGE/CBOT didn't move much on the day, the effect of the calendar move was to drive up July11 CBOT to within 2 cents of MGE. A month ago, we saw July10 MGE at 75 cents over CBOT. So far it looks like there will be larger inventories of Spring Wheat next July, and somewhat smaller Soft Winter Wheat inventories, but I don't believe it adds up to an equivalence in price; there will be plenty of both and hard wheat will still have a premium.