Creeping Back to Sanity

While outright prices in wheat stayed elevated, both the calendar spreads and intermarket spreads moved back toward more sensible levels. The CBOT backwardation from Dec to July11 dropped from over 50 cents to under 30 cents. Of course, with the nearby CBOT Sep/Dec trading at a 30+cent contango, and the VSR storage rate poised to jump to 11 cents/month, it's still hard to imagine Dec staying anywhere near 30 cents premium for long. Similarly, on the intermarket spreads KC and MGE were about 10-15 cents stronger than CBOT for most of the day. Since the Russian drought does not in any way favor CBOT wheat over the hard wheat futures, there should be a lot more upside for KC and MGE against CBOT.