Today's price action could generally be described as a "return to normalcy." CBOT Sep/Dec calendar spreads inched closer to the VSR maximum. Hard wheat premiums grew.
I think it would be a mistake to dismiss the recent rally in wheat prices as entirely misguided. The rally was from very low levels. Cash Hard Red Winter Wheat was selling for close to $3/bushel--much less than the cost of production--and not a sustainable price. There's no reason wheat can't be $5.50 or $6/bushel or even higher. The aberrations that are not sustainable are the flatter calendar spreads when inventories are high. Related to that, it's hard to see why protein premiums shouldn't reassert themselves as buyers face a well-supplied market.
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