Negative news for wheat prices --I would presume aggressive export competition from Russia/Ukraine--had an impact on KC and even mighty MGEX, but the cheap CBOT wheat was bulletproof. As corn added a couple of cents, so did CBOT wheat.
As a result, I ejected the nearby long MGEX vs CBOT positions for a loss. Farther out on the curve, the intermarket spreads were steadier and toward the end of the day I used the sell-off in MGEX wheat to move my Dec12 MGEX vs CBOT position in to July12.
Overall, while the wheat/corn ratio levels will encourage feeding wheat, there is still going to be plenty of Soft Red Winter Wheat inventory--enough to drive the carry back towards record contango levels. So while it's tough to pick levels to buy nearby MGEX wheat because the relationship will be volatile, the forward curves will continue strongly to support longer term long MGEX vs CBOT positions.
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