Soybean prices showed a sharp increase last week.
The International Grains Council (IGC) soy price index, which stood at 187 points on 10 August 2020, made a steady climb to 194 points last Monday, which is the same level it was at in October 2018. The price increase is attributable mainly to good demands and to possible storm damage to soybean crops in the United States.
Less US stocks of soy than expected
Several incentives on the international market are causing the price of soybeans to rise. The National Oilseed Processors Association in the US (NOPA) published smaller soybean stocks than previously expected. Domestic soy consumption in the last period was higher than expected, which supports the continued rise of the soy price.
Soybean prices showed a sharp increase last week. Photo: Canva
Furthermore, the American sales figures of soy are good, in particular with regard to China. According to the latest USDA Wasde report, 165.6 million tons of soy will be exported worldwide in the 2020-2021 season, which is almost 4 tons more than was expected a month earlier. The US are expecting at least half of this to go into extra sales, and they are not the only ones: Argentina and Brazil are also selling an additional 1 million tons of soy each this marketing season. China and Southeast Asia are expected to purchase more.
Storm damage and drought in US
The US expects to harvest more than 120 million tons of soybeans this season, which is comparable to the production in the 2018-2019 season. However, the harvest conditions for soybeans have deteriorated slightly, as the storm that raged mainly over Iowa also damaged lots of soybeans. The USDA will carry out field research in order to assess the damage.
In addition, the weather seems to be getting drier than usual in the upcoming weeks. This also supports the soy prices on the American futures markets.
This week the forecast is: Corn prices will rise.