Grains Decline Despite Strong Global Demand

News reports indicate that global grain demand remains very strong. However, due to continued hedge fund liquidation and the credit crisis, futures prices continue weak. Ironically, this is likely to encourage purchases, and artificially-created price weakness will certainly stimulate renewed buying vigor at some point. To me, this suggests that once the hedge fund panic selling reaches equilibrium with global buying demand, prices may rebound quickly, and the bull trend is likely to resume. Reports at this week's exporter conference were particularly bullish about soybean prices, which paradoxically locked limit down again today in Chinese futures trading.