I'm looking for some feedback on a spread idea. With the weather delaying the harvest and soft red wheat likely to loose acreage I'm thinking of buying WN in Chicago and selling KCWN against it. To those seasoned grain traders out there anyone remember what happened to this spread the last time the harvest was delayed this severely?
Hello from the far away Athens City, Greece. Your Idea is Nice and Interesting. The Pattern for Arkansas, Illinois, Indiana, Missouri and Ohio, the Major Soft Red Wheat U.S.A States, is very Wet. And seems that this will continue for a time Period as see in this Site: http://www.cpc.noaa.gov/products/fews/global/north_america/united_states/ (Make also Mouse Click in the Left under Model Forecasts in the Precipitation and choose in the Upper Middle the Precip. Hours and Days Informations). Now, i want to say that possibly for to continue in your Idea is, to watch for to trade maybe, if you already have not do it, the Calendar Spread of the front Month December 2009 in Chicago with Long Months of 2010 in Chicago, for example. Also if had happen a such case in the Past, i mean between the CBOT Soft Wheat and Kansas Hard Wheat, which i do not know at all for that by my Side for that case, i mean if had happen ever a such event in the Past, you must see what Conditions had occur that time in the overall Global Wheat Situation and to how affect that, that Wheat Spread. Right now exist Big Quantities of Wheat in the World. The U.S.A Wheat Exports have drop because of the competitive Exports of Russia and Ukraine, especially. Also, Good Weather Conditions had occur or occurs in some of the Countries that Export the U.S.A. That means that need less Quantities from U.S.A to import or does not have the need to import any Quantities at all, not only from U.S.A but from other Countries as well. Anyway, i wish you Good Luck if you decide to trade your Idea or Not...! Kind Regards, George Kanellopoulos.
@ George Thanks for your comments and advice. I'm looking to put the spread on this week. We'll see what happens. I've heard the Ukranian wheat harvest is smaller than expected.
Hello. Because you mention Ukraine, i have make a very small Research for that Aspect from my Side. So, here i find it: http://nogger-noggersblog.blogspot.com/search/label/Ukraine . Here you must read some News of the recent Period. Now, from the GMRPlus Report and the Weekly Diary of Main Market Events Report of Friday 23th October 2009, of the International Grains Council, someone can read there: Monday 19 October 2009 UKRAINE Ag. Ministry: as at 16 Oct, 2009 grain harvest at 42.3m t from 14.4m ha (92% of the planned area), incl. 4.6m t maize from 1m ha (47%). (OD) 19 Oct Wednesday 21 October 2009 UKRAINE Association of Ukrainian Agribusiness Club official, to Reuters: due to drought, 2010 wheat production forecast to decline to 13-14m t, compared to around 20m t in 2009. ® 20 Oct Thursday 22 October 2009 UKRAINE UkrAgroConsult: some recent forecasts for a steep decline in 2010 wheat production (see DM 21 Oct) appear too pessimistic, with recent widespread rains likely to have boosted soil moisture levels. ® 21 Oct Kind Regards, George Kanellopoulos.
Caroy, Historically buying KW and selling Chicago has been the play around parity, it could be different but look at a yearly chart. Parity has served as great support for about a decade now.
Look at the carry between Chi and KC, commericals obviously a bit more "nervous" about KC than Chi. (-17 and -20)