Flight to liquidity

Thats the new buzz phrase this morning. After a limit down close last night on most markets the ovenight eCBOT is limit down again in many positions for beans & oil. Meal, corn & wheat are all down as well albeit not limit (at least for the time being).

The funds are continuing their scramble for cash, they know that cash is going to be harder to come by in the current climate. The Fed, the BoE and the ECB and his dog can drop interest rates as much as they like, it isn't going to help the actual cost of borrowing. All that is going to happen is the differential between base rate & the real interest rate will increase to factor in the extra risk.

At limit down this morning May soybean futures are now 21% below their high of $15.86 1/4 set as recently as Mar 3, just fifteen days ago. Meanwhile soybean oil, soybeans and palm oil on the China's Dalian Commodity Exchange fell by the daily maximum of 4 percent. Palm oil on the Malaysia Derivatives Exchange dropped as much as almost 12 percent, the biggest loss in a decade.

Continuing the theme copper, zinc, aluminium & platinum have all dropped their daily limits in the Far East overnight.