Even on a Down Day, the CBOT Wheat Outperforms

While there was a lull in the bull market in wheat prices, Dec CBOT Wheat pushed to almost 10 cents over KC and pulled almost even with MGE. The cash market for Soft Red Winter Wheat (CBOT) is also at the smallest discount to futures. The explanation for the relatively strong cash price has been that since the CBOT had by far the steepest contango, soft wheat was being stored instead of sold. With the recent flattening of the forward curve, along with the current strong cash price relative to futures, that soft wheat should come back out into the market. We'll see.

It seems the market is expecting only a small reduction in world inventories in next week's WASDE numbers from the USDA. This may not stop a rampant bull market, since the supply increases may be concentrated in non-exporting nations such as China. So if large inventories won't even counteract the "shortage," there may be no stopping a further rally in CBOT prices, both outright and vs KC and MGE (and even tulips).