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Many misjudgments regarding wheat 08/01/2010 @ 8:21pm Two evaluation terms this year by 'analysts' and 'traders' help set up this situation. One was 'the world is awash in wheat'. After a combination or market misjudgments combined with 'normal production variation' [my term] we again find the markets being surprised. Define 'awash in wheat'. Wheat is the most global of grains in production and trade. Yes, the globe has a lot of wheat after a shocking shortage a few years ago. The key is, who has it, what is its class and condition, and is it available for global trade? The other issue is the amount of N American reserves. The massive opinion this year was that the US had burdensome and price depressing 'surpluses'. The opinion was naive and short sighted - as it is always. By definition we are always in surplus. By definition we are an exporter. Exporters must have surpluses to do business. Now that weather has intervened it is now inescapable that our 'surplus' is in fact a great opportunity. This is a normal set of circumstances. Just because futures are particularly insensitive to the 'future' doesn't make the current situation abnormal. In fact it is a norm. I've made fun of analysts who depend on myopic generalities about the market before. I get to continue the practice. Markets are made by physical conditions, not technical analysis of futures. When the day comes that physical is tied more closely to futures the paper trade will be a more reliable tool.

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