Bargain Hunting

As July MGEX spent another volatile day in steep backwardation, I was tempted to look out on the futures curve for bargains. Dec MGEX at 42 cents over KC? OK, I'll have a little of that. Cash Hard Red Spring wheat still trades at a premium to July MGEX, so it appears this scramble for hard, high-protein wheat will continue. Will the new crop of spring wheat be large enough that values are driven back down to more normal levels--like 42 cents over KC? Maybe, and maybe Dec MGEX will drop even more than that...but then again, with the cash markets favoring Hard Red Spring by $2.80 over Hard Red Winter, the market is building in a lot of optimism for a good HRS crop.