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Soybeans inching towards $12 per bushel

Soybeans inching towards $12 per bushel

A perfect storm of events has helped prices, a commodity strategist said

By Diego Flammini
Staff Writer

Soybean prices are the highest they’ve ever been this year.

As of 11:00 a.m. ET on Tuesday, soybeans are selling for $11.77 per bushel on the Chicago Board of Trade.

By comparison, on Jan. 1, 2020, farmers could market soybeans for about $9.56/bu.

“No one in the U.S. thought we could even get to $10/bu, and now here we are (almost at $12/bu), said Moe Agostino, chief commodity strategist with Risk Management.

So, how did prices get to where they are?

A series of trade and weather events, Agostino said.

“It started with better-than-expected demand, particularly from China as they bought soybeans because they needed them as part of the Phase 1 trade deal,” he said.

The U.S. and China signed the agreement in January with the Asian country agreeing to ramp up its ag purchases.

As of Oct. 23, China has purchased $23.6 billion in U.S. farm products, or about 71 percent of its intended ag commitments.

Weather in South America is also contributing to better prices for U.S. farmers.

Brazil and Argentina, the two largest exporters of soybeans in the continent, “will need ideal weather conditions to produce a bumper crop, and the next five or six weeks will either make or break the crop”, Agostino said.

Earlier in the month, Brazil suspended tariffs on soybean imports from outside a continental trading bloc to help make up domestic supplies in the country.

The U.S. has been able to help fill that gap with about 42,000 short tons of soybeans.

Are these Tuesday morning prices the peak for 2020?

If South America doesn’t get the weather it needs, prices could go even higher, Agostino said.

“Many in the trade see $12, but I think we are going to see $13 futures,” he said. “It could happen by the end of the year. If South America gets less-than-ideal moisture in the next month or so, it could happen very quickly.”

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