Soybean Prices Dominated By Supply Uncertainty
The price of soybeans is being driving by supply side uncertainties.
The new crop November soybean contract traded at the CME Group in Chicago reached its current contract high price of $11.86 a bushel about a month ago. This is $3.22 above the low made last November. University of Illinois agricultural economist Darrel Good says as is typically the case this time of year, price direction will now be mostly determined by the estimated size of the U.S. crop, with the pace of consumption playing a minor role.
Quote Summary - Forecasts of an upcoming period of above normal temperatures in the U.S., a continuation of strong export sales, and a strong pace to the domestic crush have helped support the recent modest price rally.
While the strong pace of export sales and the domestic crush may have provided modest support for soybean prices, the major focus writes Darrel Good in this week’s Weekly Outlook found on the FarmDocDaily website has been and will continue to be on U.S. weather and yield prospects.
The main short term uncertainty surrounds the duration of an upcoming period of above normal temperatures for much of the soybean production area. With so much of the growing season remaining, however, yield uncertainty could persist for several more weeks. The resulting price fluctuations will provide opportunities for producers to make additional sales in the run-up to harvest.
There is enough time and enough uncertainty in the market at this point for rallies to still come. When this happens Darrel Good believes farmers should reward the market with additional soybean sales.