Chuck Penner

 

 

Hoarding is having a supportive influence on global commodity markets.

"A lot of countries have been grabbing on to supplies of wheat, rice and some of the feedgrains too. So from a short term perspective, it's very positive for prices," says Chuck Penner, president of LeftField Commodity Research. "The difficulty is when you look medium or longer term and they start to find out they have enough in their warehouses and they're comfortable with where things are at, and then they stop buying. That's typically when the market starts to tip over.

He says North African countries tend to be larger buyers in wheat and barley markets.

"So they tend to be really strong in those markets, but the way things are right now, everything seems to be spilling over from one to the other. Everything is so tight that wheat spills over into corn and corn spills into beans and wheat, so it's a bit of circle that we're going on right now," he says.

Meanwhile, China continues to fill warehouses.

"When you look at soybean imports by China, they've just been ramping up year-over-year, up to 55 to 60 million tonnes this year, but they've also been building their ending stocks. When they get to enough stocks, and then they stop or even level off their imports, that could be a danger signal for the markets."

~ Wednesday, February 16, 2011 ~