The prices of the soy reached their highest level in nearly a decade on Thursday amid nervous markets worried about lower-than-expected production while demand remains high, especially due to rising energy prices.
In the futures market Chicagothe bushel of soybeans (about 27 kg) for delivery in July reached US$ 17.8400, for the first time since September 2012, very close to the absolute record, that is, US$ 17.9475.
The margins left by crushing soybeans, that is, grinding them to extract their oil, are currently very high, he explains. Jake Hanleyof Teucrium Tradingdue to the increase in energy prices, since soybeans are massively used to produce biofuels.
Consequently, this increases the demand for soybeans and pushes prices up.
“The processors are looking for soybeans and sometimes they have to increase the supply” to obtain it, he indicated Jason Brittof Central State Commoditieswhich stimulates the cash market (for immediate delivery) and futures.
For the expert, this rise is also related to the sustained pace of US exports, especially to China. “They import US soybeans and also buy everything they can from Brazil”he highlighted.
According to the broker CHS Hedgingdespite the lockdowns that paralyzed the economy of several Chinese cities, in particular Shanghaisoybean imports in May were higher than their level for the same month in 2021.
Nervousness also grips the operators on the eve of the publication of the monthly report of the department of US Agriculture (USDA)which will update yield, production, and inventory estimates.
In accordance with CHS Hedgingthe Department of Agriculture should revise downwards its estimate of world inventories for the 2021-2022 campaign, which is explained in part by a slightly lower production of Brazilfirst world producer.
Globally, “some fear that the production figures for the season that is ending are wrong”accounting for larger volumes than they really are, added Jason Britt.
For Jake Hanleythe soybean market is suffering from a domino effect, further accelerating the price rally, as prices break above technical floors triggering new buying.
If prices continue to rise in the short term, the manager recalls that the forecasts of the Department of Agriculture show a net rise in production (+12%) for the 2022-2023 campaign, and of reserves for the end of the period (+16%), which would return to the levels of the end of the 2020-2021 campaign. “That will end up weighing on prices” Hanley anticipated.
Paradoxically, soybeans do not benefit other oilseeds such as palm oil and Canadian transgenic rapeseed (called canola), weighed down by the restart of Indonesian exports for the former and by the prospect of rising production for the latter.