The fibre in cereals is a laugh! (5)
I believe the answer is:
sisal
'the fibre' is the definition.
(sisal is a kind of fibre)
'in cereals is a laugh' is the wordplay.
'in' indicates a hidden word.
'SISAL' is hidden within 'cereals is a laugh'.
(Other definitions for sisal that I've seen before include "Agave cultivated for its fibre" , "material for painter, say?" , "Type of fibre" , "Agave yielding fibre" , "Agave rope-fibre" .)