A few months ago wheat passed the all time high around $8 per bushel.
For the last week, the market has been essentially shut down. It has a 30 cent limit - every day, it opend up 30 cents, and just sat there. Tonight, they raised the limit to 60 cents.
It opened limit up and is just sitting there. What's happening?
Last year was the ethanol boom. Farmers were planting corn like crazy, and wheat went down a little. Corn has gone from $2 to $5, and the corn farmers have done fine. Wheat farmers have done even better.
It looks like the next wheat crop will be much larger. More acres have been planted, and weather expectations are good. But that's 6 months away. In the meantime, stocks are at 60 year lows, and the market is in a panic.
I'd like to pronounce the corn ethanol boon over, but that doesn't seem to be the case. There are now three resource groups - energy, people food, animal food - competing for ever growing shares of ever shrinking land.
Somebody - still probably not the US - is going to suffer, bigtime.
& from India
So has wheat gone too far? Maybe not. Yesterday we heard that wheat output in India, the world's second-largest grower, may decline this year because of dry weather, supporting record global prices of the grain. And this is on top of shortfalls in Australia, China and Europe.