What a relief it is to see a bunch of green numbers after the red of Friday and Monday!
Which raises the question “Just what happened Friday and Monday?”
I called a bunch of analysts yesterday and asked them about that.
It’s a hard question to answer, because most crops suffered but oilseeds in particular got hammered even though there was a positive USDA report just a couple of days before, world equity and commodity markets were getting rocked by the usual Greek/European/Chinese/U.S. economic concerns we have grown accustomed to, and oilseeds had enjoyed one heck of a rally until recently. How do you disentangle all of that?
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Worrisome drop in grain prices
Prices had been softening for most of the previous month, but heading into the Labour Day long weekend, the price drops were startling.
So is this the end of the oilseeds rally? Is it simply a correction after a dramatic run higher? Has something begun changing in the supply and demand fundamentals deep under the surface? Is it just oilseeds finally succumbing to the weight of the slumping commodity complex of the past couple of months? Is it just an outside markets thing that will wear off soon?
I can see good arguments in favour of all of those scenarios. That tells me you might be a little overconfident if you’re a committed believer in ever-higher oilseed prices. But it’s also too early to assume that canola and soybeans have hit their highs for the year.
Whether you’re bullish or bearish, the kind of dramatic price action we saw straddling the weekend should make you recheck your assumptions and see if you’re covered.
