The Morning Vibe

17/04/12 -- The overnight grains are a bit firmer in a modest "Turnaround Tuesday" style with beans up 6-8 cents, corn flat to 1 1/2 cents higher and wheat up 2-3 cents. Crude is around half a dollar firmer.

May 12 old crop London wheat closed last night at a EUR4.30/tonne premium to May 12 Paris milling wheat. Nov 12 London wheat is the equivalent of around a EUR14.30/tonne discount. Something is clearly amiss.

Friday will be the anniversary of last year's top of the market for London wheat when May 11 traded as high as GBP222.00/tonne and closed at the highest level in history of GBP217.50/tonne. New crop Nov 11 was GBP178.25/tonne that day.

As it turned out both levels proved to be exceptionally inflated. By the end of June old crop Jul 11 was trading at less money than new crop had been back in April and Nov 11 had fallen by more than thirty quid.

Now I'm not saying that there's GBP30.00/tonne downside to Nov 12 London wheat, but there is some potential for wheat prices to work lower from where they currently reside. Especially should the 2012 crop turn out to be somewhat better than current pessimism suggests, much as it did in 2011.

Meanwhile old crop seems to be in the hands of Beelzebub, with the cash market showing around a GBP30.00/tonne premium to new crop let him keep it.