From a different perspective (A primary producer)Whilst there is...

From a different perspective (A primary producer)
Whilst there is certainly some justification in the recent price rally, the fundamentals of
supply and demand don't really warrant one of this magnitude. Although there are
legitimate concerns over winter wheat planting prospects in Russia this year, European
and US farmers will be only too keen to embrace the current price levels with significantly
higher sowings. That is exactly what they did for the 2008 harvest which saw EU output
up by 26% and US production up by 22%.
Despite London, CBOT and Paris wheat all closing higher on the week, all three actually
closed nearer the bottom of the week's trading range than the top.
Is the top already in? That as ever is a difficult one to call, and the funds are certainly
likely to have another attempt at sending it higher again. I'm tempted though to say yes,
so beware of the "bull trap". Somebody paid GBP169 for November London wheat last
week, I guess that could easily fall into the "delusion" category.
There's now 6.4 MMT worth of open interest in November Paris wheat. I think I'd rather
be first out than last out if I was sitting on that.
Just my 2 bobs worth.