Soybean prices sank near a ten-year low this week, trading on Tuesday for a mere $8.13 per bushel. A record-breaking soybean crop and low foreign demand due to ongoing trade disputes are stifling the market.
However, when a market is severely depressed, it doesn’t take much good news to spark a turnaround, which happened this week.
News out of Argentina gave the market a boost as there is talk that they will increase export taxes on grain, which will make Argentinian corn, wheat, and soybeans more expensive on the global market. Argentina is a major competitor for U.S. farmers trying to sell abroad, so higher Argentinian prices should raise demand for U.S. farm products.
Furthermore, foreign buyers that normally buy South American soybeans are finding that U.S. beans are cheaper due to the Chinese tariff dispute, which is creating more demand from buyers like the European Union, Egypt, and Indonesia.
Finally, there are rising concerns that frost could hit the Upper Midwest by the end of September. For late-planted corn and soybeans that haven’t reached full maturity, freezing temperatures could damage plants, giving bargain hunters another reason to buy.
These factors helped prices rise by nearly 5% to trade as high as $8.55, the highest price since late August. However, the market will need more than hope or rumors to gain solid ground, likely depending on trade resolutions.