Soybean prices have soared some 30% this year to a record, a surge that promises further pain for consumers facing the most severe bout of food inflation in a decade.
The continuous contract for soybeans on the Chicago Board of Trade ended trading Thursday at $17.69 a bushel, topping the previous high of $17.68, set in September 2012 when drought scorched the U.S. crop. The price fell modestly Friday, as traders pulled back from many markets following another red-hot U.S. inflation reading that intensified fears of sharper Federal Reserve interest-rate increases.
Soybeans are perhaps less widely discussed than wheat and corn, two of the other foodstuffs whose prices have soared this year as Russia’s invasion of Ukraine sidelined two major producers. Still, their rising cost stands to ripple through stretched global food and fuel chains. They are fed to chickens and salmon, as well as pigs and cows, and crushed to make cooking oils and biofuels.
The health of this year’s U.S. soybean crop is seen as the linchpin for what world markets will do. Traders and end users are worried that supplies might become even tighter if the weather is bad in the Corn Belt.
Purchasing commitments for new-crop soybeans—those just planted this spring and which have only begun to grow—are up 68% from this time last year, according to U.S. Agriculture Department data.
“With the tighter world supplies, if anything goes wrong with the weather then prices have to move,” said
president of U.S. Commodities, a brokerage based in West Des Moines, Iowa.
A lingering La Niña weather pattern is expected to introduce hot and dry conditions into the majority of the Corn Belt beginning this week. While this might help initially by drying out otherwise saturated crops in the eastern portion of the region, a prolonged hot and dry period could damage U.S. production.
As a result, traders are proceeding cautiously. “It’s like, ‘OK, what can go wrong next?’” said Mr. Roose.
Ukraine is among the top agricultural producers world-wide and is the top producer of sunflower seeds and byproducts. According to data from the USDA, Ukraine was projected to produce 17.5 million metric tons of sunflower seeds this year, along with 6.45 million tons of sunflower oil and 6.2 million tons of sunflower meal—before the war interrupted farming.
The strain on oilseeds world-wide has also affected prices for soy products in the U.S., with soybean-oil prices close to all-time highs. Soybean-oil futures on the CBOT closed trading above 80 cents a pound on Friday, near an all-time high of 87 cents a pound reached in late April after Indonesia instituted a ban on palm-oil exports.
The absence of Ukrainian oilseed exports has stressed supplies around the world, causing other major exporters to briefly pause their shipments. Indonesia, producer of 60% of the world’s palm oil, instituted an export ban in late April to try to keep its palm oil at home amid a scramble among importers to find edible oil after Ukraine’s sudden exit. That, in turn, caused prices to surge. Indonesia has since lifted the ban.
With oilseeds out of Ukraine unavailable and droughts hurting the crops in South America, buyers have turned to U.S. soybeans to fill the gap—and fast.
“The cash market has decided it wants to get as much as it can, right now,” said
vice president and chief agricultural market strategist with Chicago-based commodities brokerage Zaner Group.
Last week, Brazilian state agricultural agency Conab forecast that the country’s crop for the 2021/22 marketing year would total 124.3 million metric tons, down from 138.2 million tons the previous year. Argentina’s soybean harvest is also expected to be lower, limiting its ability to compete with the U.S. on the export market.
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