DISCLAIMER: THERE IS A POSSIBILITY THAT I COULD BE WRONG.

Minneapolis Grain Exchange seats are cheap. Everyone should buy one...and then buy one for a friend.

Monday, November 22, 2010

MGEX Premium Expands

One again CBOT wheat closed within a penny of the previous day, but today MGEX was up a nickel. I don't see any particular reason for it. Calendar spreads didn't move much on the CBOT or the MGEX. Perhaps there was some selling on the CBOT related to weakness in other markets like the S&P500 or corn or crude oil... It's nice to be the beneficiary of random moves, but it's not enough to get me to give up my long MGEX/ short CBOT position.
Posted by at

2 comments:

  1. GregoryNovember 22, 2010 at 11:59 PM

    Hi

    What do you think about the Kansas City - CBOE Dec 11 Wheat spread , It is near 5 points..

    Thanks

    Greg

    ReplyDelete
  2. tinboxNovember 23, 2010 at 6:54 AM

    On anything a year forward involving CBOT wheat, I favor shorting the CBOT because the VSR has driven deferred CBOT contracts to very high levels relative to other wheat futures. The Dec10 wheat futures contracts that are going off the board soon generally reflect current cash markets which are broadly in line with typical historical levels. So the distortion caused by the VSR seems to be manifested in the forward pricing.
    The are many uncertainties, of course. A glance back at the wheat market action in the Summer 2010 shows that--the chief risk to this trade still seems to be a speculative rush into CBOT wheat that drives it to a premium to other wheat futures.

    ReplyDelete

Subscribe to: Post Comments (Atom)