South American weather is helping support prices, a commodity analyst said
By Diego Flammini
U.S. soybean prices on Monday are as high as they’ve been in years.
As of 11:40 a.m. ET, soybeans on the Chicago Board of Trade were selling for $13.19 per bushel.
Weather woes in major soybean-producing countries is helping support U.S. prices, said Abhinesh Gopal, a commodity analyst with Farms.com Risk Management.
“Argentina and Brazil have been grappling with dry conditions since cropping began due to La Nina,” he said. “Argentina is in worse condition, but Brazil has its dry spots too.”
Most of the demand for U.S. soybeans is coming from China, Gopal added.
Farmers would have to go back seven years to the last time soybean prices were near or above $14 per bushel.
In the summer of 2014, U.S. farmers could market soybeans for $15 per bushel.
Tight balance sheets and dry weather factored into the price support at the time, Gopal said.
“The tightening of U.S. and global balance sheets started in the latter part of 2013,” he said. “Then, in early 2014, many parts of the U.S. Midwest were facing dry conditions. Demand, especially exports, was strong, which all played into the rise in soybean prices.”
Should U.S. producers lock in at these high prices?
Farmers may want to market some of their crop while prices are at these levels. But they may also want to hold some back should prices go even higher, Gopal said.
“The bullish story is not over yet,” he said. “But farmers can take advantage of current prices for their cash flow needs or to take some risk off the table.”
In the December WASDE, the USDA projected the season average soybean price for 2020/21 at $10.55 per bushel. This figure represented a 15-cent increase from the November report.
Corn and wheat prices before noon ET on Monday were at $4.82 per bushel and $6.36 per bushel, respectively.