Soybean prices rallied sharply this week as global demand for US soybeans picked up. The United States is a major soybean exporter, second only to Brazil.
It had been estimated that Brazil would produce a record soybean crop this year, but they are having problems transporting beans from the field to international markets. Logistical problems like poor roads, lack of railroads, and overburdened shipping ports have been a persistent problem for Brazilian soybean exporters. Backlogs and worker strikes at ports again this year are forcing foreign buyers to purchase US beans, which is cutting into an already-tight US supply.
As the market digested the shifts in supply and demand this week, soybeans rallied as much as 90 cents per bushel (+6.3%), reaching $15.16 per bushel on Friday morning, the highest price in over three months. While the rally was welcome news to US farmers who own soybeans, the rapid price increase will be painful to livestock feeders, biodiesel producers and other consumers who will all be feeling the pinch of higher bean prices.
Meanwhile, wheat prices continued falling this week as heavy snow across the Midwest reduced fears that record-breaking drought will persist across the Great Plains. On expectations for a better winter wheat crop, Kansas City wheat fell to the lowest price in over six months, trading down to $7.55 per bushel on Friday.
Crude Clobbered, Gasoline Stays Steady
Crude oil stockpiles swelled to a record volume for this time of year, reaching 376.4 million barrels. This unexpected rise in crude oil supplies hammered prices to $92.44 per barrel on Friday morning, the lowest price of the year. Additionally, signs than nuclear tensions with Iran may be waning diminished the threat to global crude oil supplies.
Meanwhile, continued refinery closures are diminishing demand for crude oil. Unfortunately for drivers, refinery closures are also limiting the supply of gasoline and diesel fuel, which is keeping those prices elevated, despite the recent sell-off in crude oil.