Giving back a little to the market. Having withdrawn from the July MGEX, and sobered by the Goldman roll action in the CBOT July, I am sitting with some long Dec MGEX positions vs both KC and CBOT--mostly on the strength of the cash Hard Red Spring wheat market.
Even with July/Sep MGEX 90 cents off the high, the current 50 cent backwardation indicates very tight supplies of high-protein wheat. While some amount of soft wheat inventory will be used to feed cattle (now that it is at a discount to corn), it is going to have to be a lot to bring the cash premium for Hard Red Spring from $3.60+/bushel down to the Dec contract level of $1.20.
Still, with markets this volatile, I certainly am willing to get out and reevaluate if losses mount.
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Tom Farley's Wheat Trading Journal
DISCLAIMER: THERE IS A POSSIBILITY THAT I COULD BE WRONG.
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