The CFTC data for wheat and corn from March 11, 2014

Speculators switched from net short to net long wheat last week. Over 10,000 net long positions are a clear sign that the times of price pressure are over at the moment. This is clearly shown by the price changes in Chicago and Paris in recent weeks. The price increase of approx. 20 euros/t is mainly due to the events in Ukraine but also to the drought in the main American growing regions. However, one should be aware that this is not yet a definitive trend reversal, but at best a short-term trend. The medium-term price direction will only emerge in the coming months after reliable estimates for the 2014/15 financial year are available. Net long positions in corn have increased by over 50,000 units to 209,561 net long positions in the last week. Speculators were probably initially thinking of possible cultivation restrictions in Ukraine. The Crimea issue continues to influence prices on the stock exchanges. However, Crimea itself is not a major agricultural commodity problem, neither in terms of production nor exports. The "rest" of Ukraine and the other Black Sea ports have completely different volumes. The report "Crimea lacks fuel" makes sensational reading, but does not turn the world markets upside down. Of course, Ukraine as a whole is suffering from the political crisis and of course this can and will lead to a lack of resources and motivation to sow and cultivate spring crops for optimal production. It is therefore clear that Ukraine's average export volume of 8 million tons of wheat and 18 million tons of maize and other cereals, as well as several million tons of rapeseed and sunflowers, achieved in recent years, is at risk in the 2014/15 financial year. However, one must also see the other side of the coin. The sanctions announced against Russia may prevent agricultural exports to that country, with the result that a decline in the consumption of other agricultural commodities is likely. Whether the feared declines in production and consumption due to the Crimea crisis will ultimately balance each other out or whether one or the other will outweigh the other cannot be answered today. Will there be a global grain surplus or deficit in the 2014/15 financial year? This will depend not only on the Crimean crisis, but also on production and consumption conditions in the rest of the world.

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