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| It is not standard practice..IF so , how and why would MGEX exist?
SRWW( Chicago ) and DNSW (MGEX) are two distinct products with two distinct function's as related to the milling and baking industry…One cannot replace his DNSW needs with SRWW. So what’s the hedge relationship?
There is not one….Thus negating the “hedge “ mindset.
I understand the attraction..given the volumes etc..
I also understand the word “hedge” and its different meanings given one’s risk profile…
So having said that…The MGEX risk generally if from the short side …rather than long.
Your post suggests you would be a MGEX seller…Day in /day out that will hurt more vs the other wheats as opposed to being long MGEX.
So while it’s not a hedge…it’s a half sister thing that might be useful.
If you want to get closer to a hedge…use KC…Substitution of HRWW for DNSW occurs at a price relationship…
Substitution of SRWW for DNSW does not occur.
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Hedging HRSW in Minneapolis vs Chicago
