There was short-covering in wheat by trend-followers in the recent CFTC COT report, but that report was only through Tuesday and the market didn't really turn down until later in the week....
Anyway, new week but MGE Spring Wheat futures still the weakest. After a couple of days on the sidelines, we are tip-toeing back in. Trying to get back to the fundamentally appealing trades, we mostly bought July11 MGE at 16-17 cents over CBOT (July10 topped out at about 80 cents over). As usual, I am wary of being short CBOT futures a year forward as the contango could steepen and drive the forward prices up, but we also added to our CBOT calendar spreads (sold Sep10/ bought July11)to offset this concern.
Ethanol managed to get a bit cheaper; it dropped more than corn and more than gasoline. It's hard to understand that kind of weakness when producer margins are low and the nearby ethanol market is in backwardation. Although it's not really my specialty, for my personal, non-wheat, non-spreading account, I am outright long a few ethanol contracts.
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