The premium for March12 KC to CBOT has remained within a 5-6 cent range for a week now: 53-54 cents at the bottom, 59-60 cents at the top. MGEX intermarket spreads have been more volatile with March trading up to $2.40 premium to CBOT and below $2.20 as I type this.
The KC and CBOT calendar spreads show no indication of tightness for the foreseeable future while MGEX is in backwardation until the 2012 harvest--and less than 50% of full carry even then. Given the high global inventories of wheat, I feel more comfortable participating in the well supplied KC and CBOT markets. The MGEX premium appears to be under some pressure with the high prices killing demand. We can take another look after the inventories are released tomorrow.
I don't see any compelling trades at all. Someone please tell me I am wrong. Maybe CBOT wheat is cheap relative to Euronext?
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