Once More unto the Breach...MGEX Edition

After having been shaken out of long MGEX/short KC and CBOT wheat positions two long weeks ago, once again I am grasping the high-protein, spring-planted MGEX and shorting the CBOT. Since I don't want to get pushed out of this position by mark-to-market misfortune, the positions are more modest this time. Also a bit farther out on the futures curve.

Pro: Very tight MGEX calendar spreads indicate little supply.
Con: Speculators covering short CBOT could drive that up faster. Also, a corn rally could drive CBOT up faster.

More Discipline

Only this time, the "get out of losing trades" kind of discipline.

Hottest July since 1955 in Iowa and more heat still to come ...This weather has pushed corn back to the highs (for Dec) and pushed the bottom end of the wheat market up with it. Therefore Long MGEX vs anything was the wrong way to be.

Further, on the calendar spreads, expensive corn leads to more livestock seeing CBOT soft wheat in their rations, so that Sep/Dec spread reflects tighter supplies and we had to exit that as well.

Flat all around now.

Two Full Sessions with No Wheat Trading

What discipline!

Intermarket wheat spreads have continued to trade in a narrow range.

Calendar spreads on the CBOT continue to drift toward steeper contango. If the Sep/Dec calendar spread continues on this trend, I will liquidate in 4-5 days against the GSCI index investors rolling their long positions to Dec.