The funds are back!
Following my previously-posted trade last night for soybeans, prices sagged as traders liquidated their trade before they went to bed. However, at the start of the business day in Europe, soybean buyers were out in force. I did not take this second trade (green arc on the right side), as I was asleep. However, the strong liquidity and forceful movement of soybeans shows that fund buying is back, and is driving prices even higher. Of course, funds wouldn't be buying at all if the global demand/supply equation weren't making it profitable. Rest assured that when the supply rises to meet the demand, funds will be just as quick to short the market, driving prices powerfully lower. But don't hold your breath, since there is a limit to the amount of arable land on the planet, and demand for food is growing faster than the supply can increase to meet it. The United States must produce a bumper crop of grain this year just to meet the existing demand, and if weather doesn't cooperate, the supply will fall short, and prices will increase substantially. That is a recipe for continued price strength, not a bubble! That is the recipe for a famine!
The only thing that would possibly bring prices into check would be a stronger US Dollar. Have you see the Dollar overnight? It is lower (at 71.755 at the time of this posting), and approaching its all-time lows set within the past few months of 71.205. If the value of the Dollar break below that amount, look out belooooooow! And commodity prices will rocket even higher!
