Though my gut feeling is that this move is premature, I exited the Long March12 KC vs CBOT and replaced it with long March12 MGEX vs CBOT. With wheat prices generally lower and the premium for Dec11 MGEX or cash Hard Red Spring wheat declining, the stocks have started to flow out of storage in Duluth once again.
The current $2.20 premium for March12 MGEX does not look like a bargain on a historical basis. Positions in MGEX/CBOT spreads should be smaller than KC/CBOT because it is a more volatile pair, so I will step in here gingerly.
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