More Bear Market Dynamics

We saw wheat down 15-20 cents for most of the day and the intermarket spreads and calendar spreads responded predictably: MGEX Sep wheat strengthened to 42 cents over CBOT while calendar spreads drifted towards steeper contango. While we are mostly trading Dec wheat, I note the Sep level because as that spread collapsed in the "Russian spike" I thought we would see it return to 75 cents premium--we may see it yet. Of course, that doesn't really matter if you've stopped out at lower levels, but it's still worth noting. Note also that the Sep/Dec spread is very tight on the MGEX and it makes the Dec MGEX at 12 cents over CBOT look pretty attractive.

Ethanol still very strong with Sep at 9-10 cents over October and at a premium to Sep RBOB gasoline. While ethanol looks pricey vs gasoline, the nearby month strength and cheapness vs corn make it an attractive buy out toward the Dec contract.