Same Post as Yesterday, More Steps Back toward Rationality

The relative value spreads have traded back to levels that are no longer insane. There may be a lot of room left, but Dec10/July11 CBOT is back in contango; MGEX is premium to CBOT all along the futures curve. Both that calendar spread and the that intermarket spread may have another 50-60 cents in them, but they are back at levels that are economically plausible in some scenarios, however unlikely.

Not knowing if or when the CBOT may rally again, I've reduced exposure--liquidating calendar spreads and paring down the long MGEX/short CBOT position.