MGEX Wheat Creeps Higher vs CBOT

As the Euro-phoria of late last week fades, downward pressure on CBOT has grown. With commodities markets generally falling, the CBOT has seen the bulk of the speculative selling. MGEX, on the other hand, reported declining inventories in both Duluth and Minneapolis indicating that the peak storage numbers after the harvest have already been seen. The backwardation of Dec11 over March has softened, but cash market premiums for hard wheat over soft are continuing at elevated levels.

All in all, it looks like a good time to hold MGEX wheat vs CBOT, especially out past the nearby, very expensive Dec contract.