Exactly Why Am I So Bullish On Wheat?
In the face of the global recession, is a question I keep getting asked.
Well there are really lots of reasons...
Firstly, world plantings are sharply lower, why wouldn't they be?
Secondly, it seems highly unlikely that MOST of the world will have weather conditions so good in 2009 that they will churn out yields as favourable as in 2008.
Thirdly, we have a situation where the current financial crisis seems to favour sharply lower inputs in 2009. Whether that is fertiliser, pesticides or irrigation, if farmers can't afford it then they won't do it.
Combine all three and we have, in my opinion, a potentially explosive cocktail of dramatically lower production in the coming season.
The way I see it is that wheat production will be down big time in 2009/10, not DESPITE the current recession, but BECAUSE of it.
I will endeavour to do some more work on this in the next few days, but with some of the latest predictions of wheat production for 2009 now rumbling through, I think that the real balance sheet for 2009/10 may look a lot tighter than many are currently suggesting.
Well there are really lots of reasons...
Firstly, world plantings are sharply lower, why wouldn't they be?
Secondly, it seems highly unlikely that MOST of the world will have weather conditions so good in 2009 that they will churn out yields as favourable as in 2008.
Thirdly, we have a situation where the current financial crisis seems to favour sharply lower inputs in 2009. Whether that is fertiliser, pesticides or irrigation, if farmers can't afford it then they won't do it.
Combine all three and we have, in my opinion, a potentially explosive cocktail of dramatically lower production in the coming season.
The way I see it is that wheat production will be down big time in 2009/10, not DESPITE the current recession, but BECAUSE of it.
I will endeavour to do some more work on this in the next few days, but with some of the latest predictions of wheat production for 2009 now rumbling through, I think that the real balance sheet for 2009/10 may look a lot tighter than many are currently suggesting.
