More Unsubstantiated But Plausible Gossip

A leading UK grain merchant is refusing to buy any more grain at current levels as the only way of hedging purchases is by selling futures and the margin calls are now crippling, is one story reaching my ears today.

Faced with a dearth of real physical buyers willing to pay these prices they're caught between a rock and a hard place.

Sell the futures and carry the physicals hoping that the market doesn't collapse before a buyer can be found? Not a lot of prudence there is there?

Meanwhile the physical longs that they have to offset the futures shorts will be shrinking all the time as ex farm tonnage evaporates, as it has the habit of doing when prices rise by more than fifty pounds a tonne.

Who'd want to be a grain merchant in this market?

Additionally, the wheat going into the bioethanol refineries is going to be dearer than the DDGS coming out before long if this carries on. Meanwhile the price of crude has hardly moved.

We must be getting near to delusion now.