Soybeans are some of the most important exports from the United States. They are grown in the middle American states like Iowa, Missouri and Nebraska. The US is endowed with good weather and flat and fertile land that is ideal for this type of agriculture.
This year, soybeans and the entire agricultural sector has been watched closely by investors. This is as the US engages China in a trade war. China has responded by imposing tariffs on American soybeans and other agricultural commodities. This has led to the price of soybeans to experience a sharp decline.
This week, the price of soybeans rose after last week’s WASDE report. This is a monthly report from the Department of Agriculture that predicts the global demand and supply of agricultural commodities. The report showed that the supply of soybeans was decreasing. It said:
Soybean production is forecast at 4,690 million bushels, down 3.5 million with higher yields offset by lower harvested area. The soybean yield is projected at 53.1 bushels per acre, up 0.3 bushels from the September forecast. Harvested area is reduced 0.6 million acres to 88.3 million. Increases for North Dakota, Nebraska, and Iowa are more than offset by reductions in many other states. Soybean supplies for 2018/19 are projected at a record 5,153 million bushels on higher beginning stocks. With soybean use unchanged, ending stocks are projected at 885 million bushels.
Globally, however, the report said that the supply was expected to reach a record level of 369 million tonnes.
The price of soybeans has fallen slightly to a low of $8.62 from the weekly high of $8.9. This was mostly because of the traders who exited their trades in profit taking. I believe that with China-US tensions rising, more farmers will potentially reduce the acreage to soybeans. This may lead to an increase in the price of the beans.
