Soybean prices flirt with records, US farmers could win big

Cold snaps and droughts have rocked Brazil and other major agricultural producers in South America this summer (the seasons are opposite in the hemispheres, but the rumor that toilet flushes are different is a myth). This has already made coffee and the sugar added to that coffee more expensive.

The last South American crop on the list of inflation risks is soybeans – although that allows American soybean farmers to make a tasty profit on a product that is good for more than just healthy dairy alternatives.

Nothing corny about it

Last week, the US Department of Agriculture said Brazilian soybean production would fall by 5 million metric tons to 134 million tons this year, while Argentine production would fall by 1.5 million tons to 45 million. tons. On Friday, that sent Chicago Board of Trade soybean futures above $15.80 a bushel, the highest since last June flirting with decade highs.

Soybean prices are up 18% in 2022, more than even corn and wheat, which have been pushed higher by the threat of military conflict on the Ukraine-Russia border. While Brazilian farmers may not exactly dance the samba, the U.S. agricultural industry is expecting a potential windfall from their products, which beyond tofu are essential to both feeding the poultry and livestock and some renewable fuels like biodiesel (Chevron invested $600 million in two processing facilities last year):

  • The USDA said last week that the country’s agricultural and food exports received record demand and totaled $177 billion last year, 18% more than in 2020 and 15% more than in 2014. previous record year – China alone bought $33 billion.
  • Acres planted with soybeans in America are expected to reach 92.4 million this year, according to Farm Futures, which would be the largest soybean crop ever and the largest acreage of corn – which is expected to drop by three million acres to 90. .4 million – for only the second time.

Call the reserves: With shortages at home, some analysts say Brazilian farmers are reluctant to go abroad, which could lead U.S. producers to dip into their reserves to take advantage of the new demand. But U.S. reserves are currently relatively low, estimated at 257 million bushels for the 2021-22 marketing year, less than half of the 525 million bushels for the 2020-21 marketing year. There is always oat milk.