Wednesday, February 27, 2008

Bizarre Action in the Wheat Market

" Instability characterized U.S. grain markets Wednesday, featuring bipolar trading in wheat futures, which forced some prospective buyers to pull all cash bids.

Winter wheat futures closed about 80 cents a bushel higher on the day, even though cash contracts of spring wheat plunged 5-10%.

"Iraq bought 550,000-600,000 metric tons (20-22 million bushels) of U.S. hard red wheat overnight," said a CBOT market report. "The Iraq buying was partially offset by news that Japan (recently a major buyer of spring wheat) canceled their weekly wheat tender."

With spot wheat futures now seeing daily trading ranges of $2-$3 per bushel, and neither buyer nor seller confident of current market values, export basis bids for all classes of spring and winter wheat were left completely unquoted by USDA late Wednesday.

At this point, it is difficult to rationalize what has happened in the wheat market," said Benson Quinn Commodities analyst Dave Lehl. "Fear and greed have become the predominant factors driving price direction for wheat."" -read the full article at

This certainly could help explain why DBA, an agriculture exchange traded fund (ETF), made a new all time high and traded the heaviest volume ever today:

*Update: One dead body so far, or should we call this guy a rogue trader?

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