Specs Continue to Exit...

My trading has nearly come to a halt--I am maintaining long Dec MGEX vs KC positions. Also maintaining a small long Dec CBOT wheat vs. corn position.

Managed money futures positions in CBOT wheat are now short. With both hedgers and speculators short the CBOT wheat, the only group net long is the passive index investors. If the market should somehow turn higher, it will be quite a scramble in the CBOT wheat, since the passive investors are, well, passive--they won't respond to higher prices by selling.

While most of the ag traders are looking forward to the Thursday USDA report, I am looking forward to tomorrow's MGEX report on deliverable stocks in Duluth. With fewer than 8 million bushels in place with 9 weeks to harvest, it will be interesting to see what happens if that number continues dropping at its 1-2 million/week pace. Also, it might be worth noting that one broker took delivery on 1500+ contracts in May. That won't happen in July--because there aren't going to be that many contracts in storage...