A marketing question.

[Choice2U]

Thanks. For anyone concerned about this being a marketing thread, I will now consider this when deciding on whether to lock in the MGE futures on my CWB basis contract. The MGE Dark Northern has been trending down the past week but is up significantly today so will it continue to go up and resume the longer term trend or were we at a peak and down is the new flavour. I have until June 26 to lock it in. Any suggestions would be appreciated.

[charliep]

Likely the poorest short term forecaster here but
will give my two bits.

Start off with the USDA report which is basically
nothing new on wheat. Did drop wheat wheat
production a 1 MMT which was basically Canada.
Market participants will look at for about a second
and then put attention back to weather outlook.

http://www.usda.gov/oce/commodity/wasde/latest
.pdf

Today will be critical. A continuation of yesterdays
rally signals better things ahead. Failure to hold
suggests just the opposite. Markets stable over
night.

I am optimist short term as ado suggests but would
have my price targets in place with regular review
to ensure relevant. I like the area $7.75 to maybe
$8 which ar the recent highs for a target price.

If not or if the market rallies, run a trailing stop
behind your pricing (maybe 25 cents). Based on
yesterday, a MGEX July close below $7.25 means
price. If prices rally to $7.75/bu, a close below
$7.50/bu means sell. Etc.

Short term forecasting a head of a contract
deadline is what I always find most difficult.

What would others do?

[charliep]

mcfarms

Talked to the CWB. You still have to let the CWB know which crop
year you want in prior to June 30 even though you might deliver
to a domestic processor after July 31 but apply against a 2008/09
contract series.

A caveat though is that as long as you have filled 90 % of your
2008/09 contracts, you can make the choice to deliver and sell
into 2009/10 using new crop delivery rights. could use up early
CWB delivery opportunities - not 100 % sure on how domestic
millers handled on delivery contracts.

Still like the idea of pricing out old crop much better.

[checking]

The word "ouch" comes to mind. Charliep, you are the one guy we can always count on for an answer-opinion. Much appreciated. The more I use multiple year storage, the more I believe I'm doing the right thing. The less I have to deal with the CWB which has been one year (2007-2008) out of ten, the more I know I'm doing the right thing.

[charliep]

Today's action in the wheat (particularly MGEX) would make me very nervous about pricing out over the next couple of weeks. Wouldn't necessarily put the trigger today but I would be nervous.

On the theory of sell high/buy low, I might look at options strategies. That is, buy calls on market dips and be prepared to price on any MGEX rally over the week and a half. You can carry your pricing window into July then.

Again a caveat is you are close to a delivery month and any thing can happen - particularly in the summer weather silly season.