Shortly before the latest USDA estimate for the new grain harvest, US corn prices are once again soaring. Soybean prices are going one better with their rate of increase.
It is becoming increasingly clear that large harvests are imminent.
The apparent contradiction is resolved by the extremely tight supply of both maize and soybean meal. The market prices are kept high by the high spot prices or underlying values (= gap between spot price and market price). The physically tangible commodity becomes the decisive point of reference for price determination in the forward futures.
As the trend progresses, the question of when the price peak will be reached and exceeded becomes more and more exciting. Which signal will trigger the trend reversal? Possibly the upcoming USDA report? The expected price drop is likely to be severe. Should less risk-averse investors seek safety or is it still too early?
