March 19, 2004

US Soybean Prices Break $10 Per Bushel Barrier

Prices of US soybean rose above $10.00 per bushel, the highest price in 15 years in an unprecedented rally.

The upward pressure on soybean prices mounted with fresh news of shipping problems in Brazil and reports that the rate of crushing soybeans for livestock feed in the United States has not dropped as much as projected.

Chicago Board of Trade May soybeans on Thursday set anew 15-1/2-year top of $10.20 per bushel, before settling up 24 cents at $10.18 per bushel.

"We've been over $10 in soybeans only three times in history - 1973, 1977 and 1988," said Roger Knapp, of Memphis-based STA Trading Services. "We're not slowing demand down."

Testing for GMOs, uncertainty over rules and a ban on shiploading overtime mainly caused problems in Brazil in the main grain port of Paranagua. This was exacerbated by a strike by Agriculture Ministry sanitation inspectors.

CBOT traders speculated Brazil's 2003-04 soy crop could total between 52 and 56 million tons, versus last year's 52.50 million tons. No. 3 global soy grower Argentina's 2003-04 soybean crop is estimated near 34.5 million tons, below last year's record 35.2 million tons.

In comparison, the United States' 2003-04 soy crop, harvested last fall, totaled 65.80 million tons. Strong Chinese buying and high domestic crush demand quickly depleted locally grown soybeans.

"This is an absolute shortfall of soybeans in the United States, and there's a lack of ability to bring in a free flow of imports from South America," Knapp said.