November 12, 2003

US October Soybean Prices At Its Peak
 

In October, figures show that soybean prices in US peaked at their highest levels in six years.

At the end of October, soybean prices hit 794 cents/bushel, a rise of 6.72 per cent in the month and the highest price level since July 1997. The strength in soybean prices was largely driven by a very poor harvest in the US, due to occurrence of droughts in the Midwest, that leaves the 2003/04 US soybean crop poised to be the lowest since 1996/97.

The weather conditions this summer most severely damaged the soybean crop, as soybeans have a slightly later planting season than corn and wheat.

On the demand side, Chinese demand for feed grains such as soybeans and corn, has been increasing as the demand for beef and pork has grown with rising per capita income.

According to analysts Goldman Sachs, increased Chinese demand, coupled with potential weather-related damage to the Chinese corn crop, has prompted both an increase in Chinese corn export prices and an increase in the demand for US soybean exports.

They predict that the demand for US corn and soybeans could potentially increase in other parts of Asia, further tightening the balance of the already-tight US soybean and corn markets.