Soybean prices neared a one-year high on Friday, rallying as traders grew concerned about weather in Argentina.
Hot, dry weather is plaguing the South American crop and could reduce yields significantly in the world’s third-largest soybean grower. If Argentina’s crop continues to struggle, more foreign buyers will turn to U.S. soybeans, an expectation that is boosting prices at a crucial time.
Prices at this time of year are critical for farmers across the Midwest who need to decide which crop to plant on millions of acres this spring.
In the past few years, producers have been hard-pressed to turn a profit, depending on record-breaking harvests to squeeze by.
For most farmers, the price of corn in Chicago needs to be over $4.00 per bushel to turn a profit, and some need to see the price closer to $4.50 a bushel. As of Friday, December corn futures, representing the value of the upcoming fall harvest, was $3.97, leaving many farmers in a precarious position.
Meanwhile, breakeven levels for soybeans are near $10.00 per bushel for many producers, which may cause them to shift toward soybeans, which were priced at $10.22 per bushel on Friday for the November futures, a level that gives many a comfortable margin.