There’s never a dull moment in the wheat markets these days.
Up, down, all around, like a rollercoaster.
But mainly up.
Here’s what Chicago winter wheat futures have been doing in the last few days:
Look at that whiplash-inducing swing a couple of trading days ago!
We know the stories moving the wheat markets: crop production problems in various places like Australia and the southern U.S.; Egypt; commodity market volatility.
The market doesn’t know which way to turn. Wheat’s been up today, breaking away from its buddies, corn and soybeans. What’s the reason? Partly a Societe Generale report showing tight world wheat stocks in 2011-12, my Agricharts newsletter told my Blackberry half an hour ago.
Egypt was also in the market buying, it said. Here are the exact words: “Egypt was back in the market over the weekend . . .”
I must admit that line made me giggle and titter while I was eating an A and W Sirloin Uncle Burger just now. Egypt was back buying? Who’s “Egypt” these days? Who from Egypt was buying? Do they still have access to their bank accounts? I imagine it must be hair-raising to be a grain trader selling wheat to Egypt these days. Who are you selling to? Are they going to have the money tomorrow? Are they going to be alive next week? Right now it’s pretty hard to tell who has signing authority for Egypt’s money.
Read Also
Worrisome drop in grain prices
Prices had been softening for most of the previous month, but heading into the Labour Day long weekend, the price drops were startling.
This is nothing new for grain traders, so no doubt they’ve got it covered. We and our competitors sell crops to all sorts of crazy countries in tempestuous circumstances. In fact, that tempestuousness is often why they’re buying crops from people like us: we have stable societies, which allow us to grow, store and merchandise big surpluses of production. Many of our lower value buyers have to buy crops from us because their countries are crazily corrupt and screwed-up, so they can’t get their production systems going. The poorest become beneficiaries of aid from organizations like the Canadian Foodgrains Bank, which try to ensure hardship doesn’t produce actual famine. Those with a bit more money hand it over to us for our nice, healthy and reliable crops.
This morning I was talking to an Italian friend of mine, Strat, and we were comparing the crazy, illogical, frustrating and infuriating aspects of our countries. But as crazy as our nations both can seem, they aren’t autocracies or failed states, and we have our democratic ways in Canada and Italy to blunder our ways towards some form of reasonable functioning.
So that brings me back to volatility and Egypt. The market has been going both up and down on various interpretations of the impact of the Egyptian situation. Perhaps whoever’s the bossman next week will buy-in even more crop in order to buy civil peace. Perhaps fellow rulers of shaky states will do the same. Perhaps the joint will collapse into anarchy and they won’t be buying anything because the national chequebook goes up in flames.
No question the world’s grain markets are as twitchy as the ticket finger of a Winnipeg G4S meter maid. This made me, after chewing my Uncle Burger, go to a couple of used book stores and look for magazines from another period of wild wheat markets – the early 1970s. (And for a copy of anything written by Cicero, but that’s unrelated to this discussion.)
And those thoughts made me recall the song that was in the link above. Up, down, all around like a rollercoaster, it feels to me like we’re reliving the early 1970s.
