Aside from buying hard wheat at a discount to soft in the July and Dec11 futures contracts, my next favorite trade over the last weeks has been buying ethanol vs gasoline. This hasn't worked out so far and I find I don't have the stomach for it. More technically, the correlation is very loose and the trade may have a more volatile downside than I can comfortably afford. You can't do it very small; each gasoline contract is worth about $100,000.
So I've switched the exposure to long ethanol/ short corn. This has a tighter, more highly correlated recent history and is also attractive on a relative value basis. That ethanol is one unloved commodity.
No new developments in wheat today.
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