Wheat: Dancing On The Ceiling, Or The Only Way Is Up (Baby)?

You know that there's something amiss when the Daily Mirror starts reporting on the price of wheat. In typically Mirror-esque style they warn of "soaring" food prices saying that "this is really scary stuff".

Did wheat hit an almost impenetrable ceiling of GBP150/tonne, EUR200/tonne and USD7/bushel all at the same time yesterday? Or are we on our way up to GBP200/tonne, EUR300/tonne and USD10/bushel all over again?

This latest spectacular rally certainly isn't demand-led, we all know that. A compounder I saw yesterday told me that their wheat usage was down by around a third at these levels.

The question now is surely is how deep are the pockets in those bankers' suits? Yet again it seems that the vulnerable old wheat market has been latched onto as the easiest way to recoup some of last year's losses and restore Tarquin and Peregrine's six and seven figure bonuses, what, what, what.

Something surely has to be wrong when the open interest on the November Paris future alone is 123,000 lots? That's over six million tonnes, or around half of the entire French exportable surplus.

Yet again it seems that speculative money is holding a hefty chunk of that particular baby. Whilst it is entirely possible that they will be prepared to push things somewhat higher yet, they will not be looking to hold onto November too long. Let's face it they haven't exactly bought it to take delivery have they?

"Where d'you want this six million tonnes of wheat tipping guvnor, at the offices in Canary Wharf or those on the Champs Elysees?"

They'll be looking to pass November baby onto some other poor unsuspecting sod long before it starts wailing too loudly I'd suspect. The big question is will they attempt to roll it into January, or even March, or just put the little ginger November thing up for adoption and skip town with their ill-gotten mazoolah?

That IS a tough one to call.