Rocket Man

02/12/10 -- May London wheat opens GBP3.00/tonne higher this morning, with new crop Nov up GBP2.95/tonne in early trade. May is now up GBP12.80/tonne and Nov up GBP8.00/tonne in a week.

The difference between this rally and the one of 2007/08 is that this one has more to do with the fundamentals of supply and demand.

Supply is getting tighter by the day, and it is seriously starting to look like we will run out of wheat. Having said that from a feed perspective wheat is bloody expensive stuff at GBP180/190 ex farm, which is where it is now, you could buy rapemeal or DDGS at not much more than that.

Unfortunately however, you can't put rapemeal of DDGS through a bioethanol or starch refinery, or load them onto a boat labelled "wheat" and ship them abroad against a sale you made at GBP100/tonne six months ago. More's the pity.