An unexpected turn in Midwestern U.S. weather has canceled projections of record-breaking crop yields and has prices for corn and soybeans creeping upward – a trend that may continue for some time.
Soybean futures hit two-year highs after the U.S. Department of Agriculture (USDA) cut projected yields by 1 million tons in the September World Markets and Trade report. USDA anticipates the average on-farm price for soybeans harvested this season could reach US$9.25 per bushel, nearly a dollar higher than the U.S. agency expected when it released its August report. Projected corn prices have also increased 40 cents to US$3.50 per bushel, according to the USDA.
Upward soybean, corn prices are expected to continue as fields dry and exports surge.
Derecho hitting on August 10 damaged soybeans but, overall, the soy crop still looks strong. On top of the decreased crop production, export activity for soybeans has seen a rapid uptick, fueled by growing demand from China.
In my estimation that’s really a biggest driver here, “ Marshal said.
“Certainly the reduction matters, but it will still be the second or third largest crop on record.”
Part of this is thanks to the Phase 1 trade deal between the U.S. and China, Marshall said, but a large portion of the increase can also be attributed to China’s recovery from African swine fever (ASF).
“Right now, total demand is still below where we were pre-ASF,” he said. “The Chinese government has stated the goal is to return to that, before the end of the calendar year. So we’re not there yet, there’s probably some demand growth to come yet.”