The Financial Times reported that traders are experiencing “full-blown panic in the European grain market,” according to one source. Wheat futures displayed incredible volatility Thursday, with prices jumping over 12 percent in the European market, while U.S. wheat futures rose 6 percent but then dipped almost 3 percent to $7.65 per bushel.
It’s still unclear what the Russian ban on exports will mean in the long term, though many fear a resurgence of the 2008 food crisis, which led to global food riots in the developing world.
Wheat prices have gained over 80 percent since the middle of June. The news also hammered the share values of some food companies, like General Mills, which might not be able to efficiently pass on the increased price of grains to consumers, and would thus sustain losses.
Forecasts for the total Russian grain harvest have dropped steadily. The agriculture ministry now puts this year’s harvest at about 70 million tons, down from 100 million last year.
The Russian Grain Union asked the government to postpone the ban until September 1, since there are currently about 700,000 tons of wheat being shipped to ports for export. The Wall Street Journal reported that security is being increased on existing stocks, fearing a general panic.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.
