July KC Wheat vs Chicago Wheat Futures Spread

Once again the KC Wheat has fallen below the Chicago Wheat. I’m specifically looking at the July contracts that are hovering around -13 to -15. It is very similar to the intermarket wheat spread I wrote about in November. That one dropped down to below -30 before making a charge back to zero.

I started out the July spread at -15 with a plan to add positions every 10 down. The spread has dropped below -50 in the past but made a spectacular run back to zero. It is a solid spread but certainly isn’t without risk. It is important to have a plan to properly margin to manage that risk so drawdowns can opportunity, not disaster.

Trade Details: Intermarket Futures Wheat Spread
Futures Contracts: Long July ’16 KC Wheat vs Short July ’16 Chicago Wheat
Trade Dates: No specific dates but avoid carrying it too close to first notice
Entry Target: -15 (adjust based on your personal objectives and risk tolerance)
Margin: $700 (check with the CME for changes in margin)

The charts for this spread are very similar to the December contracts I charted last year. Feel free to view those historical charts here.


About tyler@cybersprout.net