MGEX July/Sep Indicates Some Tightness

If markets are any good at rationing demand through price, then the July/Sep MGEX calendar spread trading in close to even money should be a strong indicator that supplies of July hard spring wheat are going to be fairly tight. While there are many supply concerns around the KC hard winter wheat based on the poor growing conditions so far, there are reasons to avoid holding the July KC contract: 1) even a small crop will add to the current full-carry inventory, and 2) July KC will be the last best chance for elevators to rid themselves of grain that won't meet September 1 contract specs (though it's possible that elevators could rid themselves of poor quality inventory through careful blending, that would take time and expense).

So, yes, I like my long July MGEX vs KC position and added to it today.