Soybean futures hit a low of $8.08/bushel earlier this year, and it seemed like they would languish in the $8 range all year.
Finally, the market started to get comfortable at around $9, but who would have thought that we’d actually see $10 on the futures market? On Monday, November settled at $9.99 ½, and then took a step back Tuesday. More Chinese buying on Wednesday lead to another surge, with November hitting a high of $10.12 ¼.
Soybeans prices are at their highest levels since April 2017, which is an important benchmark year because it was before the trade tensions hit, particularly with China. The market has provided an opportunity to sell at profitable levels, while many continue to wonder just how high we can go.
“There’s a strong seasonal pattern by which China originates its soybean purchases from one supplier (the United States) and then switches over to another supplier (Brazil), with some sales of whole beans being made from Argentina,” said Dr. William Tierney, chief economist at the Ag Resource Group in Chicago. “The people that try to track the unreported amount of purchases that China has made, they think that China has purchased a huge portion of beans for September, October, November, and December. They’re now purchasing for January. In February and beyond, they overwhelmingly will originate soybeans from Brazil.”
With our soybean harvest and Brazil’s planting season both in the early stages, analysts will eagerly be monitoring our yield results and Brazilian weather, which some say has been drier than preferred. “Brazil is expected to have record soybean seedings, Brazil is expected to have record soybean production next year,” Tierney said. I think that what we’re seeing now is the tail end of the seasonal buying that China has done of US soybeans, and it’s not going to last much longer.”
Meanwhile another large Chinese soybean purchased was announced Wednesday, 327,000 metrics tons. If Brazil stays dry and has a less than ideal planting season, soybean prices could be supported even longer than expected.