Looking Back...

One of the reasons to keep a trading journal is to review the beliefs that led to poor trading decisions. While I never went short wheat vs corn, I was comfortable with bear spreads (in wheat) even though wheat was clearly a good value vs corn. I noted in late May that there was little more downside in wheat vs corn, yet added to a position that was vulnerable to a CBOT short-covering rally.

In retrospect, I should have been much more patient, waiting for wheat to trade toward less extreme levels of valuation vs other grains. I bring this up today because wheat has elevated to over 1.6X corn. While this may not be an extreme valuation, it's hard to support with wheat stocks vs usage so high. The trend-followers are now long wheat (and corn). This is a much better environment for bear-spreading.