Cycling. Is The End Nigh? And Some Food For Thought
It's appropriate then to talk about cycling, or cycles to be a bit more specific. Cyclical movements in wheat prices to be even more specific.
Personally, I'm a firm believer in cycles within cycles. I've put up my seasonal 20 year London wheat chart on here before. I couldn't find one anywhere, so I made this one myself. Getting all the data together took some time I recall, so it's not an exercise I'm looking to repeat in a hurry, unless somebody wants to pay me to do it for them?
This chart includes 20 years worth of data running from 1991 to 2010. Like I say, I haven't updated it since due to the amount of work involved. The fact that it doesn't include the last couple of crazy years in some sort of way I find comforting. Or maybe non-distorting might be a better way of putting it.
The chart for comparison below it is 2014 so far. The similarities are clear for all to see. At a glance it would appear that IF 2014 were to follow the "normal" 20 year trend then there maybe isn't too much further down side in the market. The End (Of the recent demise of London wheat) Is Indeed Nigh. Or it will come in August at any rate.
Phew! Many of you will say. I'd better start thinking about getting some bought then, others will be say. But as ever, this isn't 100% foolproof. I mean, if it was then you wouldn't be reading this would you?!
If we have a look at another chart, then it would appear that London wheat has now broken through a long-held resistance level around the upper the £130's to £140 mark.
Now, IF we are to remain below this resistance level for a while, then you could say that we are actually playing out part of a bigger cycle The one that we've been in, where the upper £130's to £140 mark is resistance, is merely a small cycle within a BIG cycle.
The BIG bike hasn't been out of the shed for a few years, four of them in fact, but when it last was out of the shed the upper £130's to £140 level were just a pipe-dream, or a distant memory - we have of course been here before.
Cue mental image of farmer waking up one morning in early 2010, with shall we say, obvious signs of feeling amorous. The farmer's wife says "have you been dreaming about a threesome with me and Kylie again?" and the farmer says "no darling, I just dreamed that I could make £130/tonne ex farm for feed wheat."
The point is is that the £140 level that we are now below isn't really a long term resistance, it's only a relatively short-term one that dates back less than 4 years. IF we are now back riding the BIG bike then there could be plenty more downside yet. The End Is Nigh is you are a grower then, in a different sort of respect.
For those of you that are able to watch You Tube (as many of the big corporates have it banned by the in house Fun Police) then this video makes interesting viewing, even if the guy concerned does make the faux pas of suggesting that Paris Rapeseed is still prices in French Francs!
You Tube
