Some delivery months in wheat futures made top extensions yesterday in the sharp early run-up. Prices fell later in the session but we can only see these daily signals at the end of the day so were not able to take advantage of that new high to establish shorts. In today's pre-market early trading prices are down even more, so an aggregate drop of around 5% has already occurred - this is a bit late to go short. The longer-term picture is not really bearish as the second of these two charts shows. The weekly-scale bottom extension that marked the low (so far) of this long decline is still 'in date' and so any weakness that occurs now may be temporary. Nonetheless, we will probably advise selling wheat short if there is any little rally in the next few days, just to try and catch what could be a further drop of 5-10%. If you see prices move back up a bit, perhaps into the 650s for March 2015 delivery, don't wait for us to publish that advice - just sell.
Meanwhile, the other grains have also been rallying since the uniform lows made in late September but by greatly varying amounts. Wheat has been the strongest, followed by corn, soya meal, soya beans and lastly soya oil, which has not rallied at all but merely traded sideways. If this uniformity is to continue then all may now dip and so we should consider which may make the best short-sale candidates. In such herdlike conditions we usually recommend selling the market which has rallied least. This would be soya oil where we already have an outstanding short position (timing out in two days) which we would now extend for a further period. Soya beans and soya meal have both just compressed, so if these break downward there may be some more severe weakness to come. such a downward break would make soya beans a candidate for sale too but we would avoid selling meal as there is an ever-present risk of a squeeze.
We have an outstanding long position in corn which we would now liquidate and consider reversing into a short position here too.