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Wheat Limit Up AGAIN (+60 cents)
- Thread starter newtrader8
- Start date
Quote from Rearden Metal:
I don't trade grains (or ags at all, for that matter), nor do I understand them.
How does a sudden wheat shortage develop in the middle of winter? Bad crops in the Southern Hemisphere?
It didn't, just appear. It's been happening since Summer but it takes this long for people to add one plus one plus one plus one. Please as a whole have a hard time applying common sense to the markets.
An increase in corn acres means a decrease in wheat & soybeans acres.
Wheat and soybeans demand didn't go down, it went up. As it does incrementally about each year.
Australia, the worlds 4th largest wheat producer, has been going through a 5 year drought and their production is about 5% of what it was. No exports. (they are getting rain now though)
Wheat in Brazil is already $14 a bushel. Here the March contract just hit limit tonight at $11.53, May $11.6375, July $10.26, September $10.25 & December $10.3225.
Most of these contracts are up over 50% since mid December 07'. You don't have to understand the agriculture industry just learn to read price and follow the news.
Quote from daddyeaux:
farmers who shorted to hedge their crops are now getting margin calls
Which they pay for from the increase in grain profits . . . if they hedge correctly using futures & options.
If they are really smart they play the futures/options and make out on both ends. These are the farmers buying up the land from the not-so-educated farmers.
Quote from daddyeaux:
farmers who shorted to hedge their crops are now getting margin calls
silver miners that sold forward to hedge future production or to meet loan agreements went bust during the Bunker Hunt silver run up in '80 since they couldn't meet margin on their short positions...
Yes sir... thousands of farmers can't keep up the cash margin calls for their short futures hedges. The hedges will be liquidated..
The old crop wheat move hasn't peaked yet. Right now, may 08 isn't limit up but if you wait till the regular session, I am positive that it will be limit and people will be scrambling to get long.
It is really amazing that a squeeze occurs this late in the old crop season but there just isn't much wheat in storage out there. People need to eat.
It is really amazing that a squeeze occurs this late in the old crop season but there just isn't much wheat in storage out there. People need to eat.