If there is uncertainty, it may lie in the politics that define demand. For instance trade rules continue to vex multiple sectors of agriculture. Supply, disease, trade-altered demand, all these factors were at play in the markets this week.
So far, Grassley has been stalled off by the Oval Office, most recently citing the need for concentration on the war with Iraq. With that problem under control, Administration officials have promised to study the issue and get back to the senator in two weeks.
Though the lack of access to Europe is affecting the market, Severe Acute Respiratory Syndrome, or SARS, is having a more direct impact on prices. China has severely curtailed its purchase of soybeans which pulled the price down from last week highs. The blame is being place on the reduction in the number of Chinese citizens going out for meals, thereby reducing the need for meat and, concurrently, reducing the need for feed.
It is still uncertain how long it will take demand to ramp back up once the disease has been brought completely under control.
One other factor affecting soybean prices is the record crop in the Southern Hemisphere. According to analysts, the South American crop is projected to exceed the total U.S. harvest. This revelation is on top of the fact that Brazilian exports alone are on track to be greater than the U.S. for the third year in a row. Numbers released by the Office of the Brazilian Secretary of Agriculture show a growth in exports of 80% over last year bringing in $798-million, approximately $350-million more than the United States.