Nogger's Blog

22/02/11 -- EU wheat took a right old royal pasting today with Mar London wheat ending down GBP9.60 to GBP194.00/tonne and new crop Nov down GBP10.50 at GBP160.00/tonne. Mar Paris wheat fell EUR13.25 to EUR246.75/tonne, with Nov down EUR14.50 to EUR215.50/tonne.

After the US markets took a hefty hit Friday, they were closed yesterday for President's Day. Something of a rebound from those looses looked to be on the cards in early Globex overnight trade before the tide suddenly and viciously turned.

By the close of Globex at 13.15 GMT Mar CBOT wheat had added a 20 3/4c loss to the 28 3/4c decline it had sustained on Friday, marking a 5.8% fall since Thursday night's close.

The daytime CBOT session proved to be even worse with wheat, corn and beans all showing limit down losses of 60c, 30c and 70c by 17.00 GMT.

Reports that Libyan leader Gaddafi said he is prepared to die as a "martyr" rather than leave the country, and the sight of Iranian war ships heading up the Suez Canal sent US crude oil prices soaring USD5-6/barrel.

That appeared to spark a mass exodus from grain markets weighed down by enormous spec longs across almost the entire sector. No doubt stop-loss computer driven selling was also a feature as London and Paris wheat both showed up with double digit losses throughout much of the afternoon.

Paris rapeseed also extended it's amazing run of bad form, posting losses of EUR12.00/tonne in nearby May, a hefty EUR55.75/tonne decline in less than six weeks.

You would normally expect rising crude to firm the grain markets, although the two seem to have become somewhat divorced of late with NYMEX crude relatively flat around USD90/barrel for most of the last six months despite soaring grain prices.

I still contend that the speculative element in the market was maybe responsible for around the top 20% of recent gains, over and above what market fundamentals justified. It looks like some of that money is now making an impromptu exit from the building, although it could - and probably will - come back. We just don't know if it will be tomorrow, next week or next year.

As Coldplay would say "nobody said it was easy, (but) no one ever said it would be this hard, oh take me back to the start....oh ooh ooh ooh ooh."