I would be grateful if you would pass on a question to David Fuller about wheat.

While breakfasting in my local cafe this morning, the owner mentioned that he was finding it increasingly difficult to buy flour - just could not get what he needed.

Having time to look into the excellent Comment of the Day archive while breakfasting I leaned something completely new to me - the influence of Saudi Arabia and its declining wheat production (previously enough to meet its own and several neighbouring country's needs) and now, due to dwindling water supplies, a massive importer of wheat.

I note that London Wheat prices are up significantly since last year. 

A few years ago David cut back on his wheat futures. So, is it time to load up again? I see from the chart that there has been a recent pull back.

I can fill my car fuel tank less expensively than I did a while back, but am I now going to have one less slice of toast! 

I look forward to another excellent presentation at the next Markets Now Seminar on 27th March. That really is 'value for money'', especially the presenters sharing their topical and timely insight as to what is driving the markets. 
Best wishes

David Fuller's view

Thanks for your toast report which reminds me that one never knows where the next seed or kernel of interesting information will come from. 

Saudi Arabia’s wheat was heavily subsidised, so I think the problem was not just about insufficient water.  It was an amazing achievement, as these pictures show, but not sustainable when cutbacks are required with oil trading around $50 a barrel. 

You may have been looking at Chicago wheat futures which did rally almost 25% from their 2016 low but are now falling back as you point out.  Low prices are often tempting but there is currently a steep contango with May contracts currently trading at $430, July $445, September $460 and December at $493 a barrel.  Consequently, one could easily lose money unless timing was immaculate and preferably from a deeply oversold condition.

However, the Saudi production cuts and wet weather in Europe has pushed sterling-quoted European wheat futures up by almost 50% from the 1Q 2016 low, helped by sterling’s weakness following the Brexit vote.  Nevertheless, that move also reflects last year’s crop so there is a small contango from November 2017 through May 2018.  This window may close shortly, unless there are problems with Europe’s summer crop. 

Consequently, I would like to see more technical and also fundamental evidence that a further recovery is commencing. However, I might still prefer a technology share or fund, so it will be interesting for all of us at Markets Now to hear what Charles Elliott likes next Monday.  Thank you for your comments on these seminars.