Brisk demand from China and dry weather conditions in Brazil have sent soybean prices on a sharp rise.
Soybean prices at the Chicago Stock Exchange have soared since August, but this rally could soon be over as harvest pressure in the US increases.
Prices have risen 20% to the equivalent of €325 per tonne - the highest level since May 2018.
The driving factor in the past two-and-a-half months has been dry sowing conditions in Brazil. This situation could delay sowings and also harvests.
This shows, on the one hand, how large China's soybean demand is and, and on the other, how limited supply from other countries of origin is.
South American soy supply from the 2019/20 crop has been used up. For this reason, China has repeatedly ordered large amounts from the US since mid August.
New-crop soybeans will not come off the field in Brazil and Argentina until spring 2021. Another factor is that China and the US are in the first phase of the current trade agreement in which China has pledged to purchase a total of US$36.5 billion (€30.8 million) worth of agricultural feedstock from the US in the 2020/21 crop year.
Another factor pushing up soy prices in the past two weeks has been dry sowing conditions in Brazil. This situation could delay sowings and also harvests to the extent that the crop would be available on the global market later than usual.
However, soybean prices could come under pressure in the coming weeks as the US harvest proceeds. So far, the harvest has progressed much more quickly than the five-year average.
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