Wheat Jumps Most in Three Months on U.S. Freeze Threat

[Purveyor]

By Jeff Wilson - Jan 23, 2014

Wheat jumped the most in three months on concern that a freeze will damage winter crops from South Dakota to Arkansas, eroding prospects for exports from the U.S., the world’s top shipper. Corn rose, and soybeans fell.

Temperatures as low as minus 7 degrees Fahrenheit (minus 22 Celsius) from Nebraska to Illinois and less than 10 degrees Fahrenheit through the lower Mississippi River Valley risk harming some winter wheat, World Weather Inc. said in a report. Colder weather next week may damage as much as 25 percent of the Midwest crop and 10 percent of plants in the Great Plains unprotected by snow cover, MDA Weather Services said.

“We probably had some damage overnight, and there’s the potential for more next week,” Mike O’Dea, a risk-management consultant at INTL FCStone Inc. in Kansas City, Missouri, said in a telephone interview. “The potential is there for damage, but we won’t know the full extent until later in the spring” when crops emerge from dormancy, he said.

Wheat futures for March delivery rose 1.6 percent to close at $5.70 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest gain for a most-active contract since Oct. 18.

MORE...

http://www.bloomberg.com/news/2014-01-23/wheat-rebounds-as-freezing-u-s-boosts-crop-damage-concerns.html

[gtar100]

1. Oh how excited the investors must be. I just love the fact we humans can profit from

the misery and hardship of others. What a joyful celebration of life our economic system is.

[Purveyor]

2. Our local mid-michigan wheat should be ok since we were blessed with foot of snow before the

deep freeze hit a couple of weeks ago.

This will help kill off and stop the northerly spread of invasive plants/bugs/animals that have been creeping north these past fews years.

[TheMightyFavog]

3. Why is futures trading even legal in the first place?

it should be banned.

[legcramp]

7. At it's simplest, futures trading or hedging was a method that allowed producers,

in this case farmers, and end users like millers and bakers to even out the swings in supply and prices.

With few exceptions you had to be one or the other, in the business so to speak.

That changed when in 2000 the CFMA (also known as the Enron Loophole) was signed.

The Commodity Futures Modernization Act of 2000 (CFMA) is United States federal legislation that officially ensured modernized regulation of financial products known as over-the-counter derivatives. It was signed into law on December 21, 2000 by President Bill Clinton. It clarified the law so that most over-the-counter (OTC) derivatives transactions between “sophisticated parties” would not be regulated as “futures” under the Commodity Exchange Act of 1936 (CEA) or as “securities” under the federal securities laws. Instead, the major dealers of those products (banks and securities firms) would continue to have their dealings in OTC derivatives supervised by their federal regulators under general “safety and soundness” standards. The Commodity Futures Trading Commission's (CFTC) desire to have “Functional regulation” of the market was also rejected. Instead, the CFTC would continue to do “entity-based supervision of OTC derivatives dealers.” These derivatives, including the credit default swap, are a few of the many causes of the financial crisis of 2008 and the subsequent 2008–2012 global recession.

In short it allowed Wall Street investment houses and brokerages to engage in futures manipulations that had been made illegal in the '30's.

http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000

[kelliekat44]

4. I thought that part of the good ole capitalist economy was sometimes risk and loss?

When I gamble at the racetrack and lose...I lose. Capitalists are greedy bastards, accepting no risk and sharing no profit, and continuously making consumers and the government pay for their risk. My heart doesn't bleed. I'll just stop eating grain-based food.

[Purveyor]

5. No worries. Many farmers buy into the gov't subsidized 'crop insurance' program that will cover

their losses.

[kelliekat44]

6. They get to cover their losses and consumer prices will go up ....nt