Weather Bakes Beans

Soybean prices rallied ninety-five cents this week, rising seven percent as traders evaluated changes in the weather, supply, and demand.

This year's unusually warm weather allowed farmers get an early start on planting this year, pushing them to plant soybeans at a record pace. Across the lower 48 states, temperatures averaged five degrees Fahrenheit above normal. Federal data released Thursday described the last twelve months as the hottest since record-keeping began over one hundred years ago.

While good for planting, recent warm weather has led to fears that the Midwest could face a hot, dry summer, which could be devastating to crops. Currently, large portions of Iowa, Illinois and Indiana farmland are experiencing drought. Expectations of drier weather pushed soybean prices up this week as traders feared soybean production would not meet expectations.

In addition, beans were bolstered by an announcement on Thursday that China was going to lower its benchmark interest rates by 0.25%, a maneuver that typically discourages saving and encourages borrowing. China is the world's largest soybean importer, and the potential for an accelerating Chinese economy helped to drive beans sharply higher. By Friday morning, the market had rocketed to a three-week high, with soybeans for July delivery trading at $14.33.

Over the weekend, market participants will be anxiously awaiting next Tuesday's USDA reports, which will show the government's expectations for world grain supply and demand. Due to expanded trading hours that started last month, the report will be released while the market is open.

Livestock Plod Higher

Despite a generally weak tone for commodity markets this week, cattle prices were able to move higher, pushing to the highest price since mid-May. Cattle were supported by higher grain prices, which make grain-fed animals more expensive to fatten up. Furthermore, there has been an increase in demand for beef ahead of Father's Day, which is often celebrated with steaks and burgers. As of midday Friday, live cattle for delivery in June were worth $1.195 per pound, up 1.5 cents (+1.3%) from last week.

Hog prices also pushed skyward with the popular July hogs gaining over two cents per pound.