Nogger's Blog

19/03/12 -- The overnight grains are mostly red this morning, seemingly taking a break from the recent push to the highest levels since September for soybeans and corn (and not too far off the best levels since then for wheat either).

"Portugal will be the next Greece" say the headlines in the Guardian amongst others today. Whilst not exactly being a "where the hell did that come from" news item, it does maybe reiterate that the European debt problem is a VERY long way off being resolved.

There's been a huge volume of spec money flood into corn and beans since the mid-December lows. Whether or not it fancies hanging around decides where we go from here IMHO.

Yes, old crop corn supply is tight. Yes, China almost certainly has routinely been exaggerating the size of it's corn harvest for years, although neither of these pieces of information are newly arrived on the table either.

The relatively small forest fire that is Greece appears to have been contained for now. Portugal appears likely to be the next to go up in flames. And next door there's much bigger trouble smouldering under the searing Spanish sun, and the eurozone firefighters appear to be running out of water.

This market is heavily overbought on corn and beans, saturated with spec length that could cause a stampede for the exit door if and when they get spooked by European debt fears again, regardless of what the fundamentals say.

When fears of a Greek collapse were at their height we saw soybeans plunge 23%, corn lose 17% and wheat dive 26% in just one calendar month last June as fund money suddenly scrambled to safety.

Keep your eye on the funds.