Two Down, Two To Go

14/03/11 -- Today's explosion at Fukushima reactor 3 following on from Friday's kerfuffle at reactor 1, leaves just reactors 2 & 4 unscathed so far. Apparently now reactor 2 has a problem with its cooling system too, according to this report from the Beeb: Bang.

The report goes on to say that the Japanese government is to throw over GBP100 billion at the economy to help prop it up, without going into detail about exactly where the money is going to come from.

Already heavily laden with debt are they simply going to just print it?

And what does this all mean for the grain markets? A few reports I've read this morning are making out a case for it being bullish longer-term, with regards to demand for biofuel as opposed to nuclear energy.

That may indeed be the case, but I think that longholders are far more interested in the here and now rather than whether to get a bit of 2015 wheat on their books.

Short-term this has to be bearish to my way of thinking. I can't see how Japanese imports aren't going to be affected. With major power outages starting today, and likely to continue for months, manufacturing of everything whether it's compound feed or computers has to be affected.

The knock-on effect of the world's third largest economy taking a hit of this magnitude, and the detrimental medium to longer term damage done by increasing the national debt whilst simultaneously decreasing the national output also looks pretty severe to me.

They are the world's largest importer of corn, the fourth biggest buyer of soybeans and sixth largest of wheat. And the vast majority of all that business is done with America. That has to be sufficient uncertainty to encourage a bit more scrambling for the exit door this week I'd have thought.