From a technical perspective I quite like the look of this one.
We've been bouncing off support here a number of times now as we head into a short and sharp seasonal window.
Inter-market spreads however can be volatile and this one suggests a risk of $1600 per contract.
In the last 15 years this one has been a winner 87% of the time with the average win being $1600 and the average loss being $700.
That looks a reasonable risk reward and in all honesty I think you could probably risk less than $1600. I'd say $1000, after examining the worst equity amounts.
The fundamentals however look a little different.
The supplies of old crop corn are quite tight. As a result there has certainly been strength in those contracts lately as farmers look to get their hands on supplies for feed. That said this is a new crop contract that we're looking at.
As for wheat it looks more neutral, with large crops around the world coming online.
We also looked at entering another corn spread and you might not what to increase your exposure to corn even more.
Potential to get long at 160.
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