Chicago December wheat has been in a downward trend recently.
It may stay there until there is more confirmation of an Australian crop decline or potential export curb in Russia.
However, the market seems to have limited selling interest at these levels.
Support I’m watching that goes back one year is around $5 (chart 1 below).
I’ve started to add position in for clients around this $5.05/bu level.
Also, I’m keeping an eye on is the spread between Minneapolis and Chicago wheat.
For clients that don’t want to buy wheat outright on Chicago, there may be an opportunity to profit from the spread.
The second chart below shows where it has been for the last five years.
I don’t think it is going back to $2.90/bu, but another 30 to 70 cents higher isn’t unreasonable.
I’m looking to buy Minneapolis wheat and short Chicago wheat.
Using spreads is a way to reduce your risk in case there are large swings that aren’t in your direction.
What you are want is one of the sides of your spread to move more than the other.
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