ManyHorses
Well-known member
Grain prices have been edging higher and led by soybeans gapped strongly to the upside Thursday and steady on Friday - but don't expect them to hold for long.
Large funds and speculators have been caught short (meaning they owe) a huge number of contracts coming up on March 1st delivery date and are attempting to buy back their positions. The funds and specs have no physical grains to deliver against their shorts and are being forced to cover their positions.
Bottom line is that the current prices are all about nothing and are simply a result of market mechanics coming up on March 1st. These prices not about value and should be considered as inflated given current supply/demand conditions and the upcoming South American harvest.
Whether the big boys have already finished up housecleaning or will next week, again the current feed grain prices probably will not hold short of extremely dry weather in South America. It is still a bit too early to price in much of a risk premium on US winter wheat so that doesn't count... and being a long holiday weekend, today is too early to predict Tuesday morning's opening but odds are that prices will be down.
Cattle produces who may also be 'grain connected' might also consider this assessment in view of the math on their LDPs.
Large funds and speculators have been caught short (meaning they owe) a huge number of contracts coming up on March 1st delivery date and are attempting to buy back their positions. The funds and specs have no physical grains to deliver against their shorts and are being forced to cover their positions.
Bottom line is that the current prices are all about nothing and are simply a result of market mechanics coming up on March 1st. These prices not about value and should be considered as inflated given current supply/demand conditions and the upcoming South American harvest.
Whether the big boys have already finished up housecleaning or will next week, again the current feed grain prices probably will not hold short of extremely dry weather in South America. It is still a bit too early to price in much of a risk premium on US winter wheat so that doesn't count... and being a long holiday weekend, today is too early to predict Tuesday morning's opening but odds are that prices will be down.
Cattle produces who may also be 'grain connected' might also consider this assessment in view of the math on their LDPs.
