Some months ago we bought Wheat versus selling corn (was May contract at the time) when wheat came historically low priced relative to corn. At that time corn was trading 30 cents below wheat. This was the tightest we had ever seen that spread. Within days at that time wheat proceeded to gain nearly 50 cents on corn, moving to 80 cents over. We saw a flush out in wheat during late June and early July which not only brought the spread to even money, but wheat actually dropped to over 30 cents below corn. This was unprecedented price action, and the spread widened to wheat 35 cents above corn. We have slid back to where corn is once again over wheat, this time by 10 cents. Weather and crop conditions are improving for corn and I do look for wheat to gain on corn based on world demand and growing conditions during the weeks to come. A look at the chart shown below will show wheat $3.00 above corn in February and still $1.50 above corn as recently as early May. Each full cent movement for the spread = $50.

The Trade: Buy September Wheat and sell September corn at market (Corn 10 ½ cents over wheat now)
Risk: Sell the spread (buy back corn and sell wheat) if corn rises to 35 cents over wheat
Objective: Look for wheat to rise to at least 50 cents over corn and more likely 75 cents over