Soybean futures have spiked to a three-week high today on the outlook that precipitation will cause a delay of the domestic harvest. The US is the world’s largest producer of soybeans, so soybean futures are quite sensitive to domestic soybean news.
Although drier weather is expected closer to the end of the week, the rain in certain areas of the Mid-West will hinder the soybean harvest with any severe weather said to be unfavorable for the mature soybean crops. The USDA reported earlier this month that this year’s oilseed harvest is trailing the average of the previous five years.
“The soybean futures are responding higher to the heavy rains and near freezing temperatures across much of the Midwest, that is keeping the farmers from being able to get the combines into the fields to harvest their crops,” said Barb Levy, chief director for The Fox Group’s futures division in Chicago, sharing her insight regarding the current soybean futures situation. Levy added, “Additional support is coming from the potential for higher overseas demand for the large U.S. (soybean) crop.”
Soybean futures trend is technically down, however a bottom appears to possibly being put in place. I am still looking for another test of the low for soybean futures, but acknowledge we may have had our last short trade if volatility doesn’t contract at these upper levels.
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