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Soybeans move $1.00

Agriculture.com Staff 07/12/2007 @ 2:27pm

The soybean market has rallied a dollar, based on the acreage situation and hot, dry weather in the forecast. The soybean market is certainly not reacting to the current year's supply/demand situation, but rather is anticipating tighter and tighter supplies in the coming two years.

Demand for soybeans has been good and the market knows acreage in 2007 is down sharply. Therefore, yield becomes much more important. With a 41.5 bushel yield, the USDA has crop size estimated 563 million bushels lower. That's a big reason for anxiety as soybeans have not yet entered their most important yield determining growth phase. Hot, dry weather in the long range forecasts make market participants nervous!

The basic fact for soybeans is that they must do much better in 2008 in the fight for acres. Plus, this could be the first time in many years when the world supply of soybeans goes down. Price must do a better job of attracting soybean acres, both here and in South America.

While some may question the need to rally so far in advance, the reality is the soybean market is simply doing what the corn market did last fall. While current supplies were adequate, as soon as the corn market got a whiff of potential supply issues, prices rallied and rallied hard. The acreage numbers have given the soybean market a similar wake-up call and prices must be high enough to attract acres away from other high priced crops in the future.

The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.

The soybean market has rallied a dollar, based on the acreage situation and hot, dry weather in the forecast. The soybean market is certainly not reacting to the current year's supply/demand situation, but rather is anticipating tighter and tighter supplies in the coming two years.

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