Recent trends continue in wheat-outright prices lower, calendar spreads move toward steeper contango, CBOT liquidations drive intermarket wheat spreads to bigger premiums for hard wheat futures.
Ethanol is recovering versus Corn. The combination of higher Crude/RBOB Gasoline and Corn under pressure from speculators liquidating long positions has helped Dec Ethanol impove by about 7 cents/gallon over the last few sessions. Not too shabby, but I think there could be a lot more upside to come.
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I really enjoy reading your blog. Literally, check it out every afternoon. Keep up the good work!
ReplyDeleteAny concern that intermarket spreads might be vulnerable to a CBOT-led spec rally. Only reason I ask is that I saw that the funds now have a net short position in CBOT W.
Yes, I do have that concern. I try to mitigate that with a "tail hedge:" long 5-10% more on the MGEX than short on the CBOT. So if CBOT were to rally $2, I would get 10-20 cents of cushioning against the spread narrowing due to speculative pressire on the CBOT. If a rally is led by demand for Hard Spring Wheat, then it's Happy Days!
ReplyDeleteThanks for the comments.