Reading the Grain Service newsletter, which advises that the Russian drought is very serious and will have continuing impact, you see a forecast of grain storage overflowing in the US this fall (with big corn and bean harvests) alongside a recommendation not to take advantage of nearly flat spreads from Dec10 through July11.
They may be right, though I doubt it. If the glut of grains, including wheat, prices itself into world markets via big and variable discounts in the cash/futures basis, then I guess it's possible. Far more likely is the scenario where the nearby spreads go to full carry while back-month spreads fluctuate even into backwardation. There just isn't much risk capital devoted to trading along the wheat futures curve. As time goes by, the spreads will, one-by-one , go to full carry.
It should be noted that at this point in this bull market, nobody is paying up for cash wheat. Rather, physical wheat is trading at ever great discounts to futures. This may be highlighted in a CFTC review of cash/futures convergence on Wednesday.
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