It's A Sea Of Red As Greek Tragedy Turns To Farce
16/06/11 -- The boards are a sea of red again this morning with front month July CBOT wheat down 10c, corn down 14c and beans down 15c in overnight trade. London wheat is around GBP2-3 lower, with Paris down EUR1-2 and Paris rapeseed falling EUR3.50-6.50 in a general commodity malaise. Concerns over Greek debt defaults seem to be sending spec money scurrying for the sidelines. "What we need most today, is unity," says French President Nicolas Sarkozy. That is most certainly what they haven't got as Greek PM George Papandreou attempts to reshuffle his government and hang onto enough power to force austerity measures through.
The French and Germans meet tomorrow to attempt to find a solution to a problem that effectively means either throwing good money after bad or standing by to see Greece default on it's debts, much of which they already own. It's a bit like lending someone some money so that they can pay you back the money that they owe you. Except that you know that the money you are lending them to pay you back with can't be repaid unless you lend them even more next week.
Which puts me in mind of the classic Laurel and Hardy sketch where Stan gives Ollie some money to pass onto Stan's wife. "Do you mean to say that the money he gave to you that you gave to him that he gave to me was the same money that I gave to him to pay him?"
As it's Royal Ascot, the term "the form book has gone out of the window" seems somewhat appropriate at this juncture. Recent price moves highlight the totally unpredictable nature of this market.
Much of the information that has come out in the past week or so would have sent the market soaring a month or two back, yet bullish news is now being cast aside. The smart money continues to want out it seems.
Agrimoney carry an interesting article today warning that Rabobank are warning that "history suggest(s) that commodity markets… should be about to fall off a cliff". Oh dear, missus.
Where are we going from here then? I fall into the camp that would suggest that prices shouldn't have fallen as much as they have, BUT neither should they have got as high as they did in the first place. It's funny how quickly GBP200/tonne becomes "normal" isn't it?
A report on Dow Jones Newswires today quotes the director of sales at Openfield as saying yesterday that farmers here probably only have about 30% of their crop sold on average, and that fresh business has "slowed to a trickle".
That could mean that there are a lot of sellers once the harvest is upon us IF final yields aren't as bad as many have feared, as I suspect will be the case. You can't blame UK growers for not wanting to sell now, they certainly don't want to get caught oversold, yet I suspect that come harvest time they'll be wishing that they had chanced their arm a little bit more.
Still, if that happens at the end of the day nobody has died, and we can all put the kettle on and sit down and have a bloody good moan. Unless yields ARE through the floor and prices go back up through the roof. Then we can all put the kettle on and sit down and have a bloody good moan.
