Call me crazy.. but the deliverable spec's on HRW Wheat are:
Delivery Specs call for 11% protein. https://www.cmegroup.com/rulebook/CBOT/II/14h.pdf
Contracts for the delivery of Hard Red Winter Wheat shall be understood as for "Contract" Hard Red Winter Wheat, and the following grades may be tendered on contract at the premiums or discounts indicated:
No. 1 Hard Red Winter Wheat with eleven percent (11%) protein level or higher deliverable at one and one-half cents (1.5¢) per bushel over contract price.
No. 2 Hard Red Winter Wheat with eleven percent (11%) protein level or higher deliverable at contract price All above grades are deliverable at protein levels equal to or greater than ten and one-half percent (10.5%) but less than eleven percent (11%) at a ten cent (10¢) per bushel discount to contract price.
Protein levels of less than ten and one-half percent (10.5%) are not deliverable on the contract.
Meanwhile cash prices are OVER futures..
( https://www.ams.usda.gov/mnreports/sj_gr110.txt )
St. Joseph, MO Fri, Nov 24, 2017 USDA-MO Dept of Ag Market News
Kansas City Daily Wheat Bids, FOB Track, dollars per bushel
Futures 4.1300
Change (¢/bu) Basis Change
HRW Wheat: Ord Protein 4.6000-5.8800 DN 8 47z to 175z UNCH
12 Pct Prot. 6.1000-6.4800 DN 8 197z to 235z UNCH
13 Pct Prot. 6.8100-6.9600 DN 8 268z to 283z UNCH
14 Pct Prot. 6.8300-6.9800 DN 8 270z to 285z UNCH
SRW Wheat NQ NQ NQ NQ
White Corn NQ NQ
Cash bids reflect the difference between the basis and the futures settlement.
Granted that's on a Railcar.. but still 11% protein is OVER KC Futures even OUT HERE in the HINTERLAND.. AND they got to pay FREIGHT to get it to delivery.. and it's not gonna be EASY to find it!!
The funds are ALREADY SHORT.. so the ONLY WAY they could come out would be to PUSH THE MARKET LOWER.. on top of already SHORT POSITIONS..
( http://www.cftc.gov/dea/futures/ag_sf.htm )
Chicago wheat Net Short.. 112,000'ish Contracts.. 560 million bushels..
KC is only Net Short 11,000 Contracts.. 55 million bushels
Now you got a carry.. near FULL Carry.. so hedged inventory is gonna stay put.. therefore your gonna have to bring in more farmer sales.. and given the La Nina conditions.. guys are gonna sit tight until.. in our case we get moisture.
This sucker is prime to squeeze.
Fire away.
Edited by JonSCKs 11/26/2017 21:57
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Can we squeeze the shorts out of wheat?
