A ‘Perfect Storm’ for soybeans
The cold temperatures that the midwest experienced last week will transition to a warmer patter for the next two weeks. While the northern states will still have some cold temps and snow, much of the central and southern plains well see temperatures that are well above last year’s levels, and also above normal, for this week into next. The warmth combined with the expected rainfall (more in northern states) could pose problems for growers who are utilizing varieties that are more susceptible to temperature fluxes and moisture during dormancy.
In other grains market news, we recently saw soybeans make a run to 34-year highs last week, and we will see these levels tested again this week. The spike was driven by a myriad of factors ranging from dry weather in South American origins, projected supply shortfalls, anticipated biofuel demand, and of course oil prices. Any one of these fundamental drivers are enough to move beans, and this ‘Perfect Storm’ recently culminated in the high futures prices that we saw last Wednesday through Friday (click on the USDA-FAS map above for current Cordoba vegetation health index indicating a decrease in plant vigor). The dryness in Argentina has some in the market talking, and our anticipation is for grains futures to trade sideways to slightly up this week, even after coming off of last week’s highs. Further out, a warmer outlook for much of January in the eastern US should soften crude prices, while other supply fundamentals remain largely unchanged.
