The “market can stay irrational longer than you can stay solvent” is a term Herbert Coyne, a mentor of mine who ran J Aron and Company, used to tell me all the time. Higher prices tend to drive higher prices, and those who bet that the trend is over will nearly certainly need to cover their shorts at one time or another.

The Indian soybean market is behaving irrationally. While fundamentals drive the global price of soybeans higher, the daily covering and subsequent rallies on Indian soybeans seem unsustainable. Those who have been brave enough to stand in front of this runaway train have been taken out to the woodshed. Conventional Indian soybean prices in dollars per metric ton settled at $1,075 on Monday, the highest level in history. If not for the recent selloff in the Rupee against the greenback, prices would be even higher.

The rally in Indian soybeans on the NCDEX has not gone unnoticed by regulators. Sources tell The Jacobsen that the Solvent…