Should You Be "Re-owning" at These Prices?
Nov 26, 2012
It seem as if
the trade is desperately trying to determine the risk that could be associated with South American weather (For more details on this, sign up for a trial of the report).There is also some fear that Chinese soybean demand is slowing to some degree. Let's also not forget about more evidence and talk of Chinese importers are looking to start sourcing corn from countries other than the US (i.e. Argentina and Ukraine). Soy bulls will be quick to dispute any type of negative news, and will point to the recent spike in soy oil sales as further evidence that the current USDA demand estimates are overly conservative and fail to paint a clear and accurate picture of just how tight supplies will eventually become. Even though this sounds compelling and certainly has some "sizzle" I would not suggest jumping on the bullish bandwagon just yet. Producers who need to get caught up on sales should continue to pull the trigger into any and all rallies. I would also NOT suggest re-owning any sales at this juncture, simply believing lower prices and better opportunities to "re-own" will present themselves in the weeks ahead. The South American weather story will need to develop further before I buy into thoughts of either soybeans or corn breaking out of their current trading range. Bottom-line, corn seems to have the best fundamental story and should provide the most stability. Bean demand out of China, and the potential for a massive South American crop could still provide some additional setbacks down the road in soy. Despite a short-term increase in US wheat sales, we still remain well behind the pace needed to meet current USDA estimates. I am also worried that since wheat has priced itself out of feed rations s of late growth in demand could soon be overstated causing some bullish liquidation down the road. Despite some early week excitement spec's might want to think twice before chasing these markets higher. Some brighter hope in the "outside" markets and thoughts of increasing US grain exports should provide some early support, but I question if the excitement can provide a rosy feeling for an extended period of time. In fact it wouldn't surprise me to see many of the larger traders using the rallies to exit more length.
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