Overnight market developments

I really, really just don't get it. Wheat seems to have suddenly gone from being the poor relation of the grains complex to the strongest leg. How the hell did that happen? It defies logic if you ask me, and it seems to be defying me to show my arse in Burtons window, as promised on here a few weeks ago.

Wheat is up around 13c this morning, adding to last night's gains. Why? Because rising corn prices in the US will lead to increased wheat usage for feed. Its not like they don't need homes for the stuff is it? They're in the middle of a crop 20% larger than last year and have so much of it in the silos that they're having to store it outside! Only in America, in the current over-hyped market eh?

But no, we're going up in Europe as well, at least the futures markets are (yesterday excepted). Torn between impending bumper crops round the corner, and watching America go higher.

The usual suspects are in the export market, Japan, South Korea, Pakistan & Iraq. That seems to be enough for the bulls in the US.

Corn and soybeans are both around 8-10c firmer in the overnights on uncertainties over the extent of crop losses due to Midwest flooding. It seems to me that this uncertainty isn't going to go away until harvest starts. After that it may well be a case of buy the rumour, sell the fact. Unfortunately before final output figures are clearer we may well have to put up with the futures market paddling it's own canoe. Quite appropriate that really under the circumstances!

The cash markets, however, may well be different. Certainly reports are suggesting that in some areas of the US basis has widened on wheat from a "normal year" of 30c/bushel to more like $2.50/bushel. If the futures markets continue to go up then that differential could widen further, both in the Chicago and at home.

In the meantime keep an eye on Burtons window!