Minneapolis/KC Wheat Spread: Trade Parameter Revision

Making a Play For May

The IMC blog has been working an order to short the March Minneapolis/Kansas City wheat spread.  Since the March grain contracts will have their First Notice Day in just another three weeks, however, it may be a prudent time to shift our focus over to the May spread.

may-minneapolis-kansas-city-wheat-spread-daily

May Minneapolis Kansas City wheat spread daily

Over the past year, the May spread has made several pullbacks during the overall run higher.  Each pullback bottomed out above the rising 100-day Moving Average.  Therefore, we are going to keep things simple and use a close below the 100-day MA as a green light to go short.

Trade Strategy:

Cancel the hypothetical order to short the March Minneapolis/Kansas City wheat spread.  Place a new order sell one May Minneapolis wheat contract and simultaneously buy one May Kansas City wheat contract if the spread closes below the rising 100-day MA (currently at +96 1/2 cents).  If filled, risk a two-day close of three cents above the spread contract high that precedes the entry (currently at +$1.25 3/4 cents). 

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