March 2013 London wheat futures hit £200/T


The ‘March 2013’ London wheat futures hit £200/T this afternoon, after soaring £7/T since last nights close. So why have we seen such a dramatic price increase, especially when we consider the fact that we have seen a notable level of profit taking, and thus slight price decline over the past couple of days?

Well, according to Investors have at least two reasons to stand firm:

First off, the near-term forecast, which is ‘always likely to be more accurate that a longer-term forecast’, is not looking too favourable. They add that the intense heat currently being received over the plains and Western Corn Belt will begin to push back into the eastern Corn Belt by the end of next week… Not exactly ideal for already wilting crops.

Secondly, they add that even if the weather does turn wet next month, it is simply too late for much of the corn to recover. Michael Cordonnier of the site comments that “if the weather would retune to more normal levels in the weeks ahead, the corn crop hold its own and future losses would be limited, but the losses already experienced are irreversible.

As a result then, it seems that we are moving away from an era of ‘will it rain and will there be enough?’ and into a perhaps even more complex era of ‘If the rain does fall, will it be too late and what is the extent of the damage already done?’.

Things could remain volatile for just a little while longer yet…


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