Dry sounding sort of cereal (3)
I believe the answer is:
rye
'sort of cereal' is the definition.
(I know that rye is a type of cereal)
'dry sounding' is the wordplay.
'dry' becomes 'wry' (synonyms).
'sounding' shows a homophone (sound like).
'wry' sounds like 'RYE'.
(Other definitions for rye that I've seen before include "Gypsy gentleman" , "Grass; whisky" , "Type of grass" , "old port" , "Drink" .)