Wow, what a rally!
To quote Manuel, the bellhop from Barcelona in Fawlty Towers, “She’s a-crazy Mr. Fawlty!” That sentiment kind of sums up the recent action in ag markets. At first, the oilseeds were leading other markets higher, but now it’s wheat that’s screaming higher and pulling up other markets. I’ve heard a number of traders tell me that current prices aren’t justified based on the fundamentals. They tell me that wheat supplies are plentiful and there is no real shortage. But frankly, that doesn’t really matter. It’s not the size of the pile of grain that matters but whether it’s growing or shrinking. And right now it’s shrinking at an alarming pace. On top of that, we have scads of investment money that wants to cash in on the next big thing, afraid they will miss another “once-in-a-lifetime” rally like we had in 2007/08. Of course, it will crash again at some point – it always does. In the meantime, there’s money to be made. Anyone with grain in the bin or the field should be cashing in by selling into the rally.