The US Department of Agriculture shocked markets on Tuesday with an outlook for a much tighter global soybean supply. US stockpiles could run low by the end of the summer, which led end users and investors to bid up the bean market after the report. At one point Tuesday, soybeans went “limit up,” climbing the exchange-permitted maximum 65 cents per bushel.
The global supply is running low due to ongoing strong demand from China, the world’s biggest consumer of beans. Meanwhile, Argentina, the world’s third-largest exporter of soybeans, is suffering from damaging rains during their harvest, forcing buyers to purchase more US beans, helping to push prices to near $11.00 this week.
This move has been wonderful for farmers, especially those who still have open acreage they can plant soybeans on this year.
Meanwhile, other Americans could feel the pinch of higher soybean prices, even though few Americans consume soybeans directly. Soybean oil is used prevalently throughout the food industry for both cooking and salad oils. Soybean meal is a major component in animal feed, impacting meat prices.
Meanwhile, corn prices remain lackluster near $3.90 per bushel while wheat lingers near multi-year lows.