Taking a Breather

Wheat gave no signs of turning higher today--even with a weaker dollar, wheat probed new lows. Still, I made myself nervous enough with the Relative Value post below that I squared up intermarket positions in MGE and KC vs CBOT wheat. I also took off most of the calendar spreads, though the Dec10/Dec11 spread still has interest coming in to sell Dec10/ buy Dec11 at a bit over 80 cents.

Perhaps we will see hard wheat (MGE and KC) premiums expand over the next week; the trend is certainly that direction and there's no fundamental reason that the premiums can't be much higher. On the other hand, there's more downside in those spreads today than a few weeks ago, and there are likely more CBOT non-commercial shorts. So we're flat and we will take a fresh look next week.