EU Grains Close
Nov London wheat ended GBP4.05 higher at GBP129.50/tonne, and Nov Paris wheat gained EUR7 to close at EUR175/tonne. Paris corn and rapeseed also posted significant gains.
Fund money continues to push the market higher. There is no doubting the crop losses in Russia and Kazakhstan, the question is does the latest price action justify, or over justify it?
I've just deleted the next three paragraphs for fear of sounding bitter and twisted, so I will attempt to tone things down a little.
Nobody can predict the heights to which the current inflow of money will push this market to. It is tempting to say that this is "unintelligent money" but it isn't really. The objective seems to be to corner a relatively illiquid market and make some money. To that end EU wheat looks like a fair target.
I recall making a speech for a certain company around October last year, you know who you are. In that, I likened the 2007/08 market to the Everton/Liverpool FA Cup Final of 1986. At the time the media was full of images and reports along the lines of "I've waited all my life for this, it will never happen again, etc."
They were ultimately incorrect, as the "once in a lifetime Cup Final" subsequently happened again a few years later in 1989. A bit like waiting for the bus really, if you get my drift.
If we can learn anything from history, it is that it does indeed repeat itself. If current prices hold, I don't think that you have to be Poirot to figure out that global wheat plantings will be up big time this autumn. Just like they were in 2008.
What is that going to do to prices? It's a no-brainer. You can send the cheques to the usual place!
Fund money continues to push the market higher. There is no doubting the crop losses in Russia and Kazakhstan, the question is does the latest price action justify, or over justify it?
I've just deleted the next three paragraphs for fear of sounding bitter and twisted, so I will attempt to tone things down a little.
Nobody can predict the heights to which the current inflow of money will push this market to. It is tempting to say that this is "unintelligent money" but it isn't really. The objective seems to be to corner a relatively illiquid market and make some money. To that end EU wheat looks like a fair target.
I recall making a speech for a certain company around October last year, you know who you are. In that, I likened the 2007/08 market to the Everton/Liverpool FA Cup Final of 1986. At the time the media was full of images and reports along the lines of "I've waited all my life for this, it will never happen again, etc."
They were ultimately incorrect, as the "once in a lifetime Cup Final" subsequently happened again a few years later in 1989. A bit like waiting for the bus really, if you get my drift.
If we can learn anything from history, it is that it does indeed repeat itself. If current prices hold, I don't think that you have to be Poirot to figure out that global wheat plantings will be up big time this autumn. Just like they were in 2008.
What is that going to do to prices? It's a no-brainer. You can send the cheques to the usual place!
