Wheat prices continue to surge - with incredible volatility. Why? Moe Agostino Explains Global Issues.

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Permalink Reply by OntAG Admin on July 28, 2010 at 7:38pm

Wheat Prices Jump on Russia and Global Production Worries.

By Farms.com Risk Management Team
www.riskmanagement.farms.com

Wheat futures prices jumped to their highest prices in more than a year with growing concerns about reduced production due to a severe drought and heat wave in the prime agriculture areas in Russia.

Production estimates continue to be cut by commodity analysts as the heat wave continues with temperatures over 100 degrees F reduce potential yields. The reduced yields could see Russia reducing the amount of wheat available for exports, which accounted for almost 20% of the world’s wheat exports.

New concerns over the lack of grain supply is pulling corn and soybean prices higher as livestock producers may have to switch feed components.

Moe Agostino, Senior Markets Analyst for Farms.com also notes that wheat production in Canada is also reduced this year with extremely wet weather. This will also be supportive of stronger grain prices.

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Permalink Reply by Joe Dales on August 3, 2010 at 9:19am

Looks like a crop disaster in Russia. Bloomberg Says Worst in 50 years.

http://www.bloomberg.com/news/2010-08-03/worst-russian-drought-in-5...

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Permalink Reply by Joann on August 6, 2010 at 11:06am

My mother had a saying: "The excuse is good enough".

While the media is reporting adverse conditions relating to wheat production even to the point warning the public the price of bread will increase..... a few questions should be asked.

where are the buyers?

This smells of the grain rally 3 years ago. The excuse then was ethanol. Reality was there were too many people playing the derivative markets.

One needs to ask how many banks, such as Goldman Sachs, have investments in grain commodities in the derivative markets today?

is the actual crop short or are derivatives rallying?

OntAG Admin said:

Wheat Prices Jump on Russia and Global Production Worries.
By Farms.com Risk Management Team www.riskmanagement.farms.com

Wheat futures prices jumped to their highest prices in more than a year with growing concerns about reduced production due to a severe drought and heat wave in the prime agriculture areas in Russia.

Production estimates continue to be cut by commodity analysts as the heat wave continues with temperatures over 100 degrees F reduce potential yields. The reduced yields could see Russia reducing the amount of wheat available for exports, which accounted for almost 20% of the world’s wheat exports.

New concerns over the lack of grain supply is pulling corn and soybean prices higher as livestock producers may have to switch feed components.

Moe Agostino, Senior Markets Analyst for Farms.com also notes that wheat production in Canada is also reduced this year with extremely wet weather. This will also be supportive of stronger grain prices.

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Permalink Reply by OntAG Admin on August 7, 2010 at 8:45am

Good questions....the market was down $60 yesterday.

Extreme volatility.

Moe happened to be down in Chicago yesterday for meetings at the CBOT and will have an interesting report on Monday.

Joe Dales

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Permalink Reply by David Kopriva on August 8, 2010 at 4:17pm

I totally agree with the Joann's reply. Although Russia may be experiencing a bad crop in total tonnage it may not be as significant as (the all too many derivative) traders suggest. South American supply may more than offset this perceived shortage with their escalation in grain production. Unfortunately when anyone who would dig a little deeper into the trading of the derivative would probably find an over escalation in options derivatives which over - valuates the total system and turns perceived shortage into an unrealistic crisis. That type of thin air trading system is alive in the futures grain exchange which is not good going forward for producers.

Joann said:

My mother had a saying: "The excuse is good enough".

While the media is reporting adverse conditions relating to wheat production even to the point warning the public the price of bread will increase..... a few questions should be asked.

where are the buyers?

This smells of the grain rally 3 years ago. The excuse then was ethanol. Reality was there were too many people playing the derivative markets.

One needs to ask how many banks, such as Goldman Sachs, have investments in grain commodities in the derivative markets today?

is the actual crop short or are derivatives rallying?

OntAG Admin said:

Wheat Prices Jump on Russia and Global Production Worries.
By Farms.com Risk Management Team www.riskmanagement.farms.com

Wheat futures prices jumped to their highest prices in more than a year with growing concerns about reduced production due to a severe drought and heat wave in the prime agriculture areas in Russia.

Production estimates continue to be cut by commodity analysts as the heat wave continues with temperatures over 100 degrees F reduce potential yields. The reduced yields could see Russia reducing the amount of wheat available for exports, which accounted for almost 20% of the world’s wheat exports.

New concerns over the lack of grain supply is pulling corn and soybean prices higher as livestock producers may have to switch feed components.

Moe Agostino, Senior Markets Analyst for Farms.com also notes that wheat production in Canada is also reduced this year with extremely wet weather. This will also be supportive of stronger grain prices.

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