Iowa Public Television


Farmers Selling Into Soybean Rally

posted on March 4, 2005

Just as they seem to do every year at about this time, the estimates of Brazilian soybean production have begun to retreat. Brazil's principal soybean crusher this week lowered its prediction for the current crop by more than three million tons. Here in the U.S., Informa dropped its guess by five million tons.

The source of the reduced projections is drought in southern Brazil. And the result has been a spike in soybean prices.

Farmers Selling Into Soybean Rally Soybean prices on nearby futures contracts at the Chicago Board of Trade moved sharply higher again this week. Since closing at just below $5.00 a bushel on February 4th, the March contract has climbed more than a dollar.

In the country, cash prices, too, have risen. Grain handling facilities in the Midwest are reporting a spike in farmer selling of both old and new crop soybeans.

The rally in soybean prices was triggered by the continuing hot and dry weather in South America. Fields in the critical pod-filling stage have gone up to six weeks without rain. As a result, analysts are predicting yield losses of up to 35 percent in some areas.

The weather news from South America has led some large non-commercial traders in the U.S. to repurchase contracts on which they were holding short positions, helping push soybean prices higher.

Tags: agriculture crops markets news