Limit down across the board, meltdown on the cards?

It's getting interesting now!

All CBOT grains/oilseeds futures closed limit down across the board. Minneapolis wheat however did manage to buck the trend, whilst July onwards was limit down (-60c), spot May managed to close just 59 3/4c! lower!

The Reuters/Jefferies CRB Index of 19 commodities tumbled the most since at least 1956.

As one analyst said "If everyone starts running for the exit door at once, it could get real ugly."

The very (inexperienced in ag terms) people who have pushed ag futures up to unprecedented levels fuelled on greed and an unwavering belief that this market is gonna go up forever, "we're in it for the long term" etc are suddenly having their judgement questioned just a short period after this massive juggernaut got on the road.

Margin calls are eating into speculative long-holders gigantic positions. For many these are positions on the scale of which have never been known. After the Bear Stearns bail-out which seemed to happen upon the market overnight the question now is who else has this kind of exposure?

Shares of MF Global (MF), which is among the largest clearing members at the world's major derivatives exchanges, fell nearly 80% MONDAY ALONE on concerns that customers may start withdrawing cash.

Talk is circulating of the Fed slashing interest rates tomorrow (Tues), indeed there are some who think that interest rates in the US could hit ZERO before the current problems are sorted out.

Of course some will still cling to the rhetoric that these latest losses "present a buying opportunity". Wheat will soon bounce back due to short supply, phenomenal world-wide demand, India, China etc, etc.

Lets not forget that 2008's crop is already in the ground. Off the top of my head we are looking at wheat production increases in the UK of 3-4mmt, France 5-6mmt, Germany 4-5mmt, Russia 3-5mmt, Ukraine 8-10mmt, Australia 10-13mmt. PLUS what the rest of the world is going to thrust at us. Lets face it, with the price of wheat where it is/has been you'd have to be a complete idiot not to grow as much as it as you possibly could this year.

Why on earth prices should be where they are against a supply situation like this is beyond me. And that's before we get onto the world-wide liquidation of livestock.