‘PANIC’ WHEAT BUYING ACROSS THE U.S.
February 26th, 2008Via: North Queensland Register:
In the wheat price surge on Monday this week, the leading wheat contract in Minneapolis, US, rose by more than the entire worth of the contract just months ago.
Prices rallied by $5.75 a bushel, or by nearly 30pc, at one point from Friday’s close.
Eight months ago on June 19, the lead Minneapolis wheat contract settled at over $US5.00 a bushel.
Panic over commodity shortages continues to emerge as the dominant factor in the global markets, with both end user and speculative buyers of corn, soybean, cotton, rice and a host of other commodities taking note of what’s happening in the wheat pit.
While US has made improvements to increase crop production efficiency in recent years, the world hasn’t really put sufficient investment into production agriculture for several decades.
The net result has been declining stocks at the same time that expanding global wealth has demanded more raw commodities.
The net result on Monday was new all-time record high prices for corn, soybeans and wheat on the same day.
Sentiment in the marketplace is changing from, ‘buying just-in-time’ to one of, ‘buy what you need at any price’ and then to ‘buy even more to restock the shelves’.
In other words, there’s evidence to suggest that we’re beginning to enter the hoarding phase of the inflationary cycle.
Research Credit: ES
I have read that only something like 10 or 20% of wheat grown in the US is for people, the rest is for feeding animals.
How long before farmers start selling off their animals and dumping demand? Here is NZ they do not even feed grains to cattle or sheep, just grass.
This is just the defacto standard mechanism for hundreds of years of fleecing the peasants at the tail end of an inflation (of credit) bubble.
The inevitable depression thereafter always crashes the price of wheat. Oh Yah, and then leads to war.
Read about France here, the land of the long-suffering peasant.
http://www.nytimes.com/books/first/p/paxton-fascism.html
But if you think you can time the depression, juggle chainsaws, and duel with the big boyz using the last floods of easy credit to corner the fringes of the market and reset the market price, you may want to figure out what this SWEA (Short Wheat ETF?) thing is trading on the London exchange.
http://finance.google.com/finance?q=LON%3ASWEA
I am not going to bother; just stocked up on big bags of whole wheat for the bread maker and boxes of Weet-Bix.