New Month, New Money?

September is here, and with it we herald the arrival of lots of new money from those nice fund chaps Tarquin, Peregrine and Ptarmigan. They might not have ever kissed a girl or started shaving properly yet, but they do know how to splash the cash these lads.

They've boxed off their August bonuses, paid for a relaxing fortnight in Sandals resort somewhere in the Caribbean and are back refreshed looking to throw lots of cash into wheat, corn and soybeans - so the only way is up. At least that's the theory.

There are a few signs however that September might not provide the bulls with such an easy ride on the coat-tails of the splash the cash brigade.

For one thing, corn and soybeans have a strong seasonal tendency to decline in price during September and October as the harvest in the US gets into full swing.

September is also the front month for CBOT beans, corn and wheat. The likely lads aren't going to want to go pouring their money into any of these nearby contracts that's for sure. That's far too much like getting involved in the cash market.

The disparity between CBOT wheat and cash wheat in the US was highlighted yesterday by there being 4413 deliveries on the first notice day of the September contract. To put it another way, guys with sales on for September Chicago wheat decided that to deliver physical wheat against those sales was a better course of action than closing those contracts out at current prices. To the tune of 4413 lots. Which is just over 600,000 MT. On the very first day that they were able to do so.

Even deliveries against both the premium wheats of the Minneapolis and Kansas wheat contracts were also larger than expected yesterday.

This certainly seems to be telling us that the physical cash wheat market isn't as strong as some would like to make out. You will also note the fairly large differential between September and December on CBOT wheat - 33 1/4c as at last night's close.

Meanwhile across the pond, Paris wheat open interest for front month November peaked at over 141,000 contracts on Monday. The equivalent of more than 7 million tonnes. Tarquin and his batty boys have indulged in such a feeding frenzy here that the open interest in November wheat is almost as high as some estimates for the entire French exportable surplus this season. And in doing so they've managed to push November up to a seemingly inexplicable EUR6.75/tonne premium to March 2011.

Open interest fell by 5,000 contracts last night. Is that a sign of the first of the smart money getting out? That will certainly be another thing to keep an eye on in the coming weeks.