Stronger market again last night, but I don't think anything changed fundamentally. The dollar is weaker and so this probably lent some support by making Dollar-based commodities more attractive to export. Wheat was again the strongest in the complex (hitting a 4.5 month peak), as further fears of what might happen in Russia continued to dominate proceedings. The rest of Europe is not exactly tropical at the moment either, so the problems could well extend beyond Russia and The Ukraine. The extent of winterkill and the likelihood of export taxes will keep markets jittery for awhile, especially for wheat. Talking of the Ukraine I read an article that was based on comments made by an agronomits based in the Ukraine, he feels the real problem was the dry autumn that they had meaning winter sown crops have made little headway, he feels they are proctected by adequate snow cover from the current conditions and that claims that 50% will have to be resown in Spring are an exaggeration he feels it will be closer to 20%.

Technically, wheat is now over-bought, so a correction is not out of the question. Support is coming from the fact that the current deep freeze is slowing exports from the black sea Ukraine only manged 1.9MMT in January only ¾ of their December figure some analysts are convinnced that despite being 6MMT under their expected export maximum Russia will announce a grain export ban very soon.

TheChinese were in the market again buyingt 120,000mts of beans yesterday, this also helped boost the markets pushing U.S. cash levels push higher.

The markets are now looking towards next week's USDA report on the 9th February. It is highly likely they will reduce their South American crop estimates to be more in line with the majority of the market. I don't think things will react too much if they do, as I assume the rest of the market has already priced in a more aggressive reduction than the USDA have been using lately.

There have been signs that the US economy has turned a corner & this has been supportive for commodities leading with Crude oil this was however down almost a $1 after official figures showed higher stocks than expected due to slipping demand so the picture remains mixed. In the far east both the Indian & Chinese economies growth rates have been slowly but apparently they are on course for a ‘soft landing’ this I would have construed as a good thing regarding the health of the world economy , but I am told that I am wrong . It means that they will not now loosen monetary policy causing a flood of inflationary forces allowing corporations to pile up paper profits, pay dividends etc. The ‘extra’ profits create further demand for materials allowing prices to rise, everyone gets rich until the music stops & they find somebody took all the chairs away while they were all charging about! That’s what happens in the West at least, but maybe just maybe those wily orientals might have learned from our mistakes after all they’ve already got most of our jobs!

Overall the market is very choppy. I feel there is an underlying nervousness that belies all the bullish talking up that is going on. It doesn’t feel right, there are hauliers looking for work at what should be one of the busiest times of the year. Wheatfeed is usually like gold dust in January but despite the rocketing grain market it has hardly moved up at all and buyers a few and far between.There is a blower company that works for us can’t get any work into London to pick up a load for us any day next week. The Baltic Dry Index considered a barometer of economic health has been driven down considerably.(See our chart on this page) We have flour millers going bust all over Britain, we can only summize that they were hit by the overpriced wheat prices and the lack of demand from their hard pressed consumers who are all tightening their belts and cutting down on cakes!

On the bright side Sterling has been having a good run against the dollar & is holding it’s own against the Euro.