Soybean prices have been staying steady as the 2023 harvest starts coming to a close. Continued demand from China should help keep prices afloat, while Brazil prays for rain.
“Soybeans have had a little more resilience. We crossed above $13 and it looked like we were going to be able to see this market push to that mid-$13 level off of a little bit disappointing yields across the region,” said Randy Martinson, president of Martinson Ag Risk Management, in Fargo, North Dakota, per a Farm & Ranch Update. “(But) demand has been fairly good. We’ve been seeing China and unknown destinations come in buying, so we’ve been gaining some export demand.”
Despite this, Martinson did note that the pace of sales in 2023 is still lagging behind the previous year.
“We’re slowly catching up. We’ve sold 30 percent less this year than last year at this time, so we are in a hole that we need to catch up with,” Martinson added, noting that grain flows have been significantly impacted by dry climate conditions in Brazil.
China Demand Diverts to U.S.
Brazil recently surpassed the U.S. in terms of soybean production. But that reign could be short-lived if its current drought continues. Due to a lack of rainfall, the Amazon River has fallen to its lowest level in over 100 years, causing demand from China to divert to the United States.
“We can see that a lot of the demand has been focused more on Brazil, but again, with their river troubles … now we’re starting to see China come to the U.S. and buy out of the Pacific Northwest because we are now the cheapest beans in the world,” Martinson said further. “So we have been competitive, and we’ve been able to start getting some of those sales and some movement out of the Pacific Northwest.”
Counteracting the drought in Brazil will be China’s continued demand for soybeans. The second largest economy is the world’s largest importer of soybeans. That should help buoy prices while Brazil’s supply is hampered.
Rising soybean prices will be a boon for the Teucrium Soybean Fund (SOYB ). The fund provides similar exposure to what investors could obtain by trading in soybean futures contracts. This offers short-term traders or longer-term buy-and-hold investors who want to diversify their current portfolios ingress to soybean price exposure.
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