No Love for Wheat Today

Very sharp move lower in wheat markets today, led by KC wheat. Works for me.

It was interesting to see July/Sep KC wheat move beyond what I see as a full carry contango. If July KC is at more than 16 cents discount to Sep, then I think it is very likely that the market is factoring in quality issues on July contracts.

Full financial carry on July/Sep CBOT has a lot of moving parts, but if storage rates stay the same, then it would be about 43 cents. If the spread averages something like 44 cents in the weeks approaching July delivery then the storage rates bump up again, and full carry will be pushed out toward 50 cents. The July/Sep CBOT is now 45 cents.

Both the KC and CBOT July/Sep calendar spreads contrast sharply with the MGEX situation--though slightly softer, July again closed at a premium to Sep on the MGEX.