Another Baby Step Back

Hard wheat futures outperform again: MGEX and KC spent most of the day in the plus column while the CBOT was mired in red. Everything sold off at the close to finish lower. Also the calendar spreads moved back toward contango--all the spreads are still at highly elevated levels from full carry, but air is leaking from the pumped up levels we saw last week.

Forecasts for Russian weather now include the possibility of rain...someday. If they get some rain in the next couple of weeks, the hype of a ruined 2011 winter wheat crop will fade. Last week's CFTC COT report did not show a big increase in non-commercial longs; I will be checking to see if they show up in tonight's report. If we see a long of new longs at these price levels with the headlines become less supportive now, the market could drop very quickly.