US market report sends corn, soybean prices soaring

Reports of drought and supply concerns in South America amid increased Chinese demand cut into international stocks, driving corn and soybean prices upward.

Corn Field Harvest In Agriculture
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Reports of drought, supply concerns in South America pushes corn and soybean prices even higher

Corn and soybean prices made another upward leap this week on the heels of reports from the U.S. Department of Agriculture (USDA) that stocks of both commodities continue to narrow.

Corn prices neared US$5 per bushel and soybeans edged toward US$14 on Tuesday after USDA raised its own 2020-21 seasonal estimates US$0.20 per bushel for corn, and US$0.60 per bushel of soybeans. According to the USDA World Markets and Trade Report, available stock of both agricultural commodities continues to narrow due to decreased production in North and South America, and continued record demand from China.

Soybean prices have jumped US$1 per bushel since mid-December, according to USDA, propelled by rising concern about production in Brazil and Argentina. Despite some recent rains, moisture levels in Brazil remain below historic norms. However, Brazil’s 2021 soybean crop is still expected to exceed previous production records, which could help to moderate prices in the coming weeks as the country’s crop comes online.

In Argentina, the availability of supplies remains constrained due to labor and political disputes. In addition to strikes at major Argentine ports, in early January the Argentina Ministry of Agriculture fueled concern about corn supplies by announcing plans to suspend exports of corn through March. According to the Ministry, the action was necessary to curb rising prices for pork, chicken, eggs, milk and animal feed, but the government rescinded the suspension in favor of a daily quota on January 11 in response to criticism from agriculture trade groups.

Meanwhile, China continues to buy soybeans at a record pace, having purchased a total of 39 million tons of soybeans from the U.S. alone as of December 31, 2020, exceeding the previous record set in 2016-17 by 6 million tons. According to the USDA, domestic prices for corn in China hit US$394 per ton in December, driving intense demand for imports of corn for feed to grow the nation’s swine industry as it continues to recover from African swine fever.

Prices for organic feedstuffs have not followed trends for conventional products. While organic corn is selling for US$.40 per bushel higher than at the end of 2019-20, organic soybean prices continue to decline, now running US$19.66 per bushel, according to a Tuesday report from organics trading platform Mercaris.

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