Soybean futures soared on Tuesday, topping $14 for the first time in nearly a month after a new US government report anticipated tighter ending stocks. A weaker greenback contributed to the crop’s substantial rally. Without a substantial injection of new supply, how much higher can soybean prices go this year?
March soybean futures surged $0.185, or 1.33%, to $14.0625 per bushel at 14:12 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybean prices flatlined last week, but they are still up more than 7% year-to-date.
According to the US Department of Agriculture (USDA), there will be reductions in ending stocks for soybeans, corn, and wheat. It also trimmed its corn and soybean harvest views for Argentina and Brazil. Overall, it was a bullish report for the agricultural sector, which has been red-hot over the last year.
Industry observers are also warning that heavy rains will impact Brazil’s soybean harvest this month. Since the rainfall can impact the country’s truck-dependent soybean shipping, the transportation of the 2020–2021 crop could take a substantial hit throughout February. But conditions are forecast to remain dry in most of Argentina for the next several days, although some rains are being reported in the nation’s northern region.
Since global demand is projected to continue skyrocketing for the remainder of 2021, foreign markets are attempting to alleviate the situation. Indonesia, one of the world’s largest soybean producers, will soon officially unveil a three-phase plan to help ease prices, including classifying soybeans as a strategic commodity that allows the government to place restrictions on imports. As a result, the USDA is forecasting the nation’s soybean output to climb to 470,000 tons.
The greenback is also supporting soybean prices. The US Dollar Index (DXY), which measures the buck against a basket of currencies, tumbled 0.38% to 90.59, from an opening of 90.91. A lower buck is good for dollar-pegged commodities because it makes it cheaper for foreign investors to purchase.
In other agricultural commodities, March corn futures added $0.04, or 0.71%, to $5.6776 per pound. March wheat futures picked up $0.0075, or 0.11%, to $6.56 a bushel. March coffee futures slumped $0.006, or 0.48%, to $1.235 per pound.
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