General Comments Demand rationing markets can be particularly difficult to trade. Greater emphasis needs to be placed on factors such as basis because the threat of a potential sell-off can sometimes by gauged by the basis. For example, if basis strengthens as futures decline, that can be an indicator that the downside is limited because the cash price is unwilling to decline with futures. Consider that prior to today, soybeans, corn and wheat all uniformly declined for several days, but cash prices were stronger for soybeans. This does not create a comfortable market position for end-users of soybeans. Soybean end-users will want to be patient, but the strong basis is implying that prices could spike suddenly and that traders then could...

TAGS – Feed Grains, Soy & Oilseeds, Wheat, Australia