Nogger's Blog

23/03/12 -- The overnight grains are higher across the board with beans leading the way in what seems to be a correction from losses earlier in the week.

Based on last night's close May 12 beans were down 24 1/2 cents on the week, May 12 corn was down 28 1/2 cents and May 12 CBOT wheat down 25 3/4 cents.

It's interesting to note that, also based on last night's close, front month London wheat has gained 15% on 2011's closing levels, Paris wheat is only 3.7% higher than on the last day of trading in 2011 whilst in Chicago prices are actually 1% lower.

Perhaps that's partly down to the fact that US wheat was simply too dear at the tail end of last year? Production potential certainly looks a lot brighter for US wheat than it did twelve months ago, with my friend Gail Martell noting "Wheat prospects are hugely improved over last season from generous precipitation in the December-March period."

Here in Europe it's starting to look like instead of a modest recovery in wheat production this year we may be in for a little cut-back. Having said that, it is still early days yet.

Offre et Demande say that Europe will have a soft wheat crop of 127-128 MMT this year, down from 129.6 MMT in 2011. Rapeseed output also looks like taking a hit. Both should be to the benefit of corn production here though.

Now we sit and wait for the USDA's stocks and planting intentions report at the end of next week.

Is it just me, or does this market seem to be setting itself up for a situation where anything other than an absolutely ideal growing season in America this summer has the potential to send prices soaring from what are already historically high levels?

Especially if our mates the funds see an opportunity for some (more) easy money.