- As is often the case, post USDA report trading has presented something of a conundrum. Yesterdays trade ended with something of a rally and, yes, there was some Chinese short covering in soybeans and meal, but the report held little, if anything, to justify a rally. Even the US$ sharply higher, again, should logically point towards a “sellerish” feel to the markets.
- Perhaps there is a lingering unease over the Brazilian situation with a national day of protest scheduled for the weekend (Sunday), or maybe there is a return of fund monies in the aftermath of recent volatility in US and world equity markets. Regardless, there is little that we can point a finger at with certainty to explain the post report solid feel to the markets. Dollar strength, with 12 year highs being hit this morning and the €uro declining to $1.05 as well as crude oil and gold giving back early gains did little to direct the ags lower. One factor that has maybe triggered short covering in wheat is nervousness over continued dryness.
- Our considered view is that there is nothing fundamental to justify the recent upswing in prices, and that we are seeing a selling opportunity as further price advances appear to have little of substance behind them.