Is KC-Chicago Wheat Spread Low Hanging Fruit or The Forbidden Apple?
Dan Hussey of Zaner Financial Services - InsideFutures.com - Mon Apr 15, 9:38AM CDT

The front month CBOT Chicago futures wheat spread tested resistance above -10 cents (-7.75 high on 3/11/19) but was quickly rejected in the ides of March. The KC-ZW spread subsequently traded lower to fresh multiyear contract lows of -37 cents under (last week). As I have continuously pointed out in my Wheat Spread Outlook, the US wheat complex finds itself arbitraging costs of carry into the cheapest means of storage. This favor rolling long (KC) wheat positions into the Chicago contract, and is likely attributing to the rather extreme narrowing of this spread in recent months. From a technical perspective there is a statistical extreme in price occurring in the spread with the contract lows of -37 cents and relative contract highs of +35 cents, this market could be oscillating around 0.0 (even money) with a 35-cent standard deviation. Buyers beware, as the trend is...

Dan's full "Spread Outlook" is available for download, including an indepth look into the most liquid spreads and market conditions that might present opportunities for spreading! Complete with charts and cost of carry calculations!

http://intranet.zaner.com/uploads/dhussey/SprdOut/Spread_Outlook_4.12.2019.pdf