Agricultural commodities have been among the best performing assets of the year so far, but, as Diapason Commodities's Sean Corrigan warns, there are starting to be some glimmers of concern.
Via Sean Corrigan's Diapason Commodities,
"China seems to be finding ways to cancel as many shipments as it can...(as we noted here) [6]
As we explained previously,
While apologists of China's collapse have been quick to point out that China's credit collapse would be largely a domestic issue, with little foreign creditor exposure at either the public debt, or private - corporate - debt levels, one thing nobody can deny is that if and when Chinese trade routes grind to a halt, the downstream impacts would be devastating, and spread like wildfire as the offshore supply chain is Ice 9'ed.
And sure enough that is what Reuters reports above is happening.
Long positions have mounted (especially in wheat)
and though few have commented on it - the SOI has swung closer to La Nina than the El Noino threshold...
The Southern Oscillation Index, or SOI, gives an indication of the development and intensity of El Niño or La Niña events in the Pacific Ocean. The SOI is calculated using the pressure differences between Tahiti and Darwin.
Sustained negative values of the SOI below −8 often indicate El Niño episodes. These negative values are usually accompanied by sustained warming of the central and eastern tropical Pacific Ocean, a decrease in the strength of the Pacific Trade Winds, and a reduction in winter and spring rainfall over much of eastern Australia and the Top End. You can read more about historical El Niño events and their effect on Australia in the Detailed analysis of past El Niño events.
Sustained positive values of the SOI above +8 are typical of a La Niña episode. They are associated with stronger Pacific trade winds and warmer sea temperatures to the north of Australia. Waters in the central and eastern tropical Pacific Ocean become cooler during this time. Together these give an increased probability that eastern and northern Australia will be wetter than normal.
Only a cold spring is really helping the bulls just now..."


