A Parity Trade In Wheat

Wheat has been a bit of a follower of recent times as much of the action has been in corn and soybeans.

Even in the last WASDE report, wheat came in much in-line with expectations.

There was some talk around of reasonably strong demand going forward and as recently as yesterday, Abares, the Australian commodities bureau, stoked concern of a shortage of 'quality' wheat.

This time of year this wheat spread (Mar14/Jul14) benefits from the March contract coming under pressure when other worldwide markets (such as Australia) begin their harvest toward the end of the year.

Traditionally the best time to enter this one isn't until October 24th, however I love it when a spread trades at parity as if offers both a good technical and historical reason to enter.

I'm short this one from parity.