The price of soybeans in the United States has reached its highest price in 6,5 years. A mix of news causes the price to climb further towards new records. This price movement also pulls the price of wheat and corn.
Also Monday, December 21, the price of soybeans turns green again in Chicago at the CBoT. This also applies to soy flour, soy oil and grain maize. A converted price of $448,27 per tonne has not been recorded in 6,5 years.
Drought kills yield
The main reason for this sharp price increase comes from South America. Drought in Argentina is delaying soybean sowing there. At the same time, port workers responsible for processing, exporting and controlling soy have been on strike for more than a week. They demand wage increases. The conditions are also dry in Brazil, which adversely affects crop development.
Rain has fallen in Brazil, but very scattered and not always in sufficient quantities. The growing conditions are better than in Argentina. This not only has consequences for soy, but also for the grain maize harvest in both countries. The trend is therefore negative for these crops.
startle response
When the markets opened on Monday, the prices actually fell. News about the mutated variant of the coronavirus, which has surfaced in the United Kingdom, has left stock traders with a good deal of fear. Agricultural commodities are also being sucked into this sentiment. In the afternoon, the prices recovered again.
Instead of a global economic recovery, there is now a greater fear of a protracted economic recession. Especially if it turns out that this rapidly spreading variant of the coronavirus poses new challenges. Another adverse effect on US grain exports is the dollar exchange rate, which appreciated again on Monday. This makes it more difficult for US exporters to maintain their competitive position.
Historical situation
The price increase of soybeans is historic. Since November 1, prices have increased by 15%. Such an increase was only noticeable in 2007 and 1987. The global demand for vegetable oils is booming. This, coupled with lower production in South America, is responsible for the current situation in the market. In addition, the global economic situation surrounding the coronavirus has now been added, which makes further increases uncertain. At the same time, there is still a lot of demand worldwide for soy, among other things.