February 1, 2021
Potential for soybean prices to rise further, says Cargill executive during USSEC event
In a recent virtual event hosted by the US Soybean Export Council (USSEC), Joe Stone, Cargill's head of corporate trading and executive vice president for the agricultural supply chain, said soybean prices could go higher as markets continue in "rationing" mode.
"If the function of the market today is to continue to ration, then we probably have to go a little bit higher than where we are today," Stone said. "But that could be a very, very choppy ride depending on the weather we have in Argentina."
If Argentina starts getting precipitation, the soybean market could be nearing the highs. If dry conditions persist, markets could go higher still, he said.
Global soybean demand has grown 250% since 1990, said Jim Sutter, CEO of USSEC. He questioned if a recent price rally puts global demand for US soy at risk.
However, China's rebuilding of its hog inventory - after its herds were decimated by African swine fever - is helping to boost soybean prices. Both Sutter and Stone expect demand to also strengthen as customers resume normal dining habits put on hold during COVID-19.
"Customers in China who consume the meal that we produce are definitely in expansion mode, and that's really good for soy demand longer term," Stone said.
Soy reserves have dwindled in the past five years, and the country is looking to the United States to rebuild their stocks. This bodes well for soybeans, Stone added.
"Chinese demand is real, and I think it's a positive for our grain markets over the course of the next 12 to 24 months," he said.
Expanding opportunities to sell soybeans globally is at the heart of USSEC's mission. Increased demand for US soy underscores the importance of maintaining the soybean industry's presence around the world through USSEC, said Jeff Jorgenson, president of the Iowa Soybean Association.
"We could be nine months away from harvesting a record-sized crop, but that record crop needs demand to be able to move it," Jorgenson said. "We rely on USSEC as our boots on the ground to be able to do that.
"If there's demand, we have to be able to supply it. Even through COVID, we are efficiently getting grains moved to ports around the world with strength in demand. It's nice to know we're still able to do that."