Nogger's Blog

26/05/11 -- Nov London wheat is currently GBP4.00/tonne higher in early trade, testing last week's all-time high of GBP199.25/tonne and seemingly determined to break through the magical GBP200.00/tonne mark.

Yields are likely to be down "50% or more" I read somewhere the other day along with reports of wheat already being cut as whole crop silage.

Farmers don't want to sell anything at the moment, as they haven't got a clue what yields they are going to get and clearly don't want to find that they've over sold. That's perfectly understandable.

Stocks are tight, tighter even than Defra's numbers released yesterday suggest, they only pegged the entire 2010/11 marketing year exports at 100,000 MT more than they know we'd exported by the end of March.

Stocks are so tight in fact that one leading UK merchant decided to sit on their May London wheat longs convinced that the market couldn't come up with the physical grain. Except it did.

Wheat is now so expensive that Ensus have decided to shut down and wait for a better day rather than continue to buy it and turn it into bioethanol. The economics would appear to have got worse since they made that descision, not better.

Wheat is now so expensive that even "they like to see it on the ticket" feed compounders are turning their backs on it.

Wheat is now so expensive that merchants are complaining that the only "buyer" is the futures market, physical buyers of real live tangible here it is where do you want it tipping guv wheat are much harder to find.

Merchants are complaining that all these futures sales they have on are once again eating into their cash reserves with every (losing) margin call that comes along. They can't unwind without a physical buyer at the other end, and finding one of those isn't easy.

On the spot market flour millers are sellers of wheatfeed pellets now at huge discounts to the price of wheat simply because they need physical movement. They need an end user mouth to take delivery of it. And those buyers are operating in a completely different market to the paper shufflers.