Not Exactly Warren Buffett

About 48 hours after peak conviction that MGE wheat and KC wheat would continue ever higher vs the CBOT, I ditched the entire position. Here's why: trend-followers still have more CBOT shorts to cover (likely if wheat trades up another 20 cents); Chinese buyers taking US corn; commodities generally behaving very positively (no significant reaction to Eurozone economic worries).

I ran through the reasons wheat would underperform other grains a few days ago. The major reason is that the strong USD would hurt exports, leaving piles of inventory. But recent exports numbers were OK. Corn and beans still have much tighter inventory situations, but wheat has drawn in the most short positions. Going to flat on intermarket wheat spreads may have been an over-reaction to today's China news in corn. But at our current scale of operations we have the ability to be nimble, so we may as well take advantage.

We did add some KC July/July11 wheat spreads at full carry. We can take delivery and earn 3% after fees for a year. Maybe 3.2% if I can get the broker to waive the delivery fees.