All the Wheat Trends Extend...

Wheat lower. CBOT forward wheat curve steeper. MGE and KC wheat at increased premiums to nearby CBOT.
Corn, after months in a narrow range, has also broken down to new lows.

Again, we are not going to fight any of these trends in wheat. In fact, we are trading wheat primarily because of these market dynamics. However, as we see speculators shorting the new lows, it's useful to remember that the "USDA believes the 2010 SRW [Soft Red Wheat-CBOT] crop will yield the nation's smallest harvest in 32 years." {DTN Grains Edition}

The idea that speculative short-covering will eventually emerge to push the CBOT back higher vs MGE and KC is an important check on maintaining large intermarket spread positions on a long-term basis. (Though I wish we had our old positions today.)