Morning Musings

We obviously aren't going to crash and burn just yet then, with corn having finally broken through the five dollar barrier overnight on forecasts for frost in northern China later next week.

Even though frost in northern China is normal for late September you understand, and even though Chinese corn demand has waned to the extent that the government only manged to find buyers for 14% of what they offered at this weeks auction.

Despite the news yesterday that US export sales were down across the board, and with Egypt cancelling wheat purchases, fund myopia is clearly in charge. Corn prices are now their highest since the last "crisis" in 2008 - despite a potentially record US harvest being upon us.

Wheat of course is going along for the ride, currently 16c higher in front month December. Yet I read on one US farmer message board yesterday "there is no shortage of grain, only a shortage of somewhere to put it" with US elevators exuding wheat from every orifice as they frantically try to find space for the impending flood of corn and soybeans.

Wheat, corn and soybeans that are all going to sit there for months, if not longer, as the funds sit on their "investment" rolling their longs.

As the posting I mentioned points out, one of the things that the last big rally achieved was to bankrupt a significant chunk of the long-term demand-base and place the livestock sector under "extreme stress".

Lessons have clearly not been learnt. So let's all go round on the roller-coaster a few more times.