Soybean Prices Spike to 2-1/2-Month Peak Over Concerns of Brazilian Supply Disruption
Published on: November 15, 2023.
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U.S. Soybean Futures Reach New Highs Amid Concerns of Decreased Harvest in Brazil
U.S. soybean futures have surged to a 2-1/2-month high as worries over unfavorable weather conditions in Brazil, the world’s top producer, continue to plague the market. The rally in soybean prices has resulted in a more than 10% increase over the past five weeks.
Meanwhile, corn and wheat futures have experienced a slight decline.
Factors Impacting the Market
- Dryness in northern and central Brazil, coupled with excessive rains in southern regions, pose a significant threat to soybean and corn production in the country, which is the largest exporter of soybeans globally.
- Consultancy AgRural has lowered its forecast for Brazil’s 2023/24 soybean crop, citing adverse weather conditions. The consultancy predicts a potential decrease of 1.1 million metric tons to 163.5 million tons, with further cuts anticipated before the end of the month.
- A surge in CBOT soymeal futures has contributed to the increase in soybean prices. Low production levels in drought-hit Argentina have bolstered demand for U.S. soymeal.
Positive Factors for U.S. Soybeans
- Supporting the rise in CBOT prices is a weaker U.S. dollar, making U.S. agricultural products more competitive for buyers with other currencies.
- China’s increased purchases of U.S. soybeans have also boosted Chicago soybeans. Analyst Arlan Suderman reveals that China’s recent bookings of 62 cargoes of U.S. soybeans have surpassed the typical weekly pace for early November.
- According to EU data, European Union soybean imports for the 2023/24 season have grown 2% compared to last year, reaching 4 million metric tons by November 12.
- Speculators have actively built long positions in soybean and soymeal futures, contributing to the upward trend in prices.
Other Market Updates
- The maize harvest estimate in France has been revised upward to 12.20 million metric tons, an increase of 13.3% from the previous year. However, heavy rains are disrupting harvesting in some parts of the country.
- U.S. wheat prices have not been significantly affected by a slight decrease in ratings for winter wheat crops. The crop’s good-to-excellent condition currently stands at 47%, down from 50% the previous week.
- Ukraine’s alternative Black Sea shipping corridor has successfully exported nearly four million metric tons of goods, including grains, since its launch in August, according to Ukrainian President Volodymyr Zelenskiy.
Overall, the soybean market continues to experience significant fluctuations due to weather-related concerns and international demand. Traders are closely watching Brazil’s harvest progress and potential supply disruptions.
Source: Zawya
