Overnight Markets

eCBOT is lower across the board as 2008 draws to a close, with corn, soybeans and wheat all heading for their first annual declines for four years.

Despite hitting record highs earlier in the year, corn seems set to close around 14-15% lower than where we left 2007, with soybeans set to post declines of around 22% and wheat, which peaked earlier, down by around a third.

Traders will be looking to square up positions, if they haven't done so already in a shortened session this afternoon ahead of tomorrows holiday. Friday will likely also be a non-event, with the real fun and games starting again on Monday 5th January 2009.

It will be interesting to see which way the market goes next Monday, I think that it's highly likely to do something dramatic. And my money is already on sharply higher.

Dryness in South America is now becoming a very serious problem (see "Is It Already Too Late For Brazil?" and "Argy Wheat Crop 'Dismal'" posted recently on Nogger's Blog).

Wheat stocks have been replenished with a bumper crop in 2008, but boy did they need to be. Projected 2008/09 world ending stocks however are still well below the previous 10-year average of 174.8 million tons.

Reduced plantings and fewer inputs due to price and credit considerations are likely to see lower production in Europe, Russia, China and the US in 2009. That doesn't give us much room for any serious weather problems.

These issues may, and in my opinion should, start to concentrate traders' minds once we are into 2009.

Best wishes for healthy & prosperous New Year.