It was less than three short days ago that we wrote about what is poised to be an imminent surge in corn prices. To wit, we said: "If revised Chinese import estimates by the US Grain Council are even
remotely correct, look for corn prices of $6.80 a bushel at last check
to jump by at least 15% in a very short amount of time. As the FT reports, "Corn prices – and with them, the price of meat – are set to explode if the latest import estimates from China are correct. The US Grain Council, the industry body, said late on Thursday
that it has received information pointing to Chinese imports as high as
9m tonnes in 2011-12, up from 1.3m in 2010-11." Why is this a
concern? Because "the US Department of Agriculture, which compiles
benchmark estimates of supply, demand and stocks, forecast Chinese imports at just 1m tonnes in 2011-12." In other words, the whole forecast supply-demand equilibrium is about to be torn to shreds." And with the market being perfectly efficient, and not dominated by dumb robotic HFT trading at all, it has taken the "market makers-cum-liquidity providers-cum-no volume meltup facilitators" just over 48 hours to understand what this means. And what it means practically, is another limit up open in the grain.
And after Rough Rice had a nice profit taking two day session, the world's most consumed staple is once again back on the verge of $16 and breaking out to the $20-24 level. We wonder how Egyptian protestors will feel when they realize that in the two weeks since the Egyptian revolution started in earnest, most foodstuffs have increased by another 15%+.