Nogger's Blog

12/12/11 -- It's interesting to see the wheat market hardly moved Friday night/Monday morning despite one of the most bearish USDA reports (for wheat in particular) that we've seen in a long time.

Record production, multi-year high stocks (yes, higher than the "burdensome" season of 2009/10), increased output amongst the top exporting nations like Australia, Canada and Argentina and lower exports from the US. It was all there, yet Chicago only closed 2-3 cents lower Friday and the overnight markets are only down by a similar amount this morning.

Maybe that's due to the already existing large short that the funds have on CBOT wheat? The market doesn't seem to want to go lower, although that doesn't mean that that isn't where it is ultimately going to end up, it's maybe just going to get there a little bit slower.

It remains to be seen what the real impact will be, if any, of Friday's "deal" between up to 26 of the 27 European member states. Once again we don't seem to have too much flesh on the bones of this agreement. It appears to be another broad-based plan the details of which haven't yet been sorted out, let alone written down anywhere. All of which hardly inspires me with a great deal of confidence that Europe is any better equipped to handle this crisis than it was a month ago.

Looks like we're in for a slow grind lower.