It seemed riskier to be out of the Dec MGEX/CBOT spread than in it. So I jumped back in buying the Dec MGEX at about 50 cents over CBOT and also at around 10 cents over KC. Don't forget to buy a little extra on the long side as a "tail hedge" against the risk of a rising grain market spurring the CBOT to narrow the spread.
I believe that at normal to lower-than-normal premiums for MGEX over CBOT that it will pay to own the MGEX contracts as the CBOT contracts will be subject to increasing VSR contangos. Already Dec/March is 22 cents more expensive to carry on the CBOT. There is every indication that full carry on the Dec/March CBOT will be around 43.5 cents--about 27% annualized to carry CBOT wheat.
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