I’ve been fielding questions from around the world. A common one is “why have wheat and soybean prices been rallying in the face of the coronovirus pandemic?” Consequentially, financial worries have affected many markets. My March 9th report warned about a potential BLACK SWAN event with respect to global markets.

Soybeans

This was sent out to subscribers to my weather-commodity service last Wednesday. It shows the seasonality of soybean prices and that the market looked oversold to me.

soybean
CHARTS ABOVE–Sent out March 18th

However, here are several reasons why soybean prices have bounced back the last few days, following dismal demand and a big South American crop. This has resulted in a $1.00 move down in prices, just a few weeks ago.

  1. Logistical problems exporting beans in South America. For example, at the Port of Santos, Brazil, union workers were suppose to vote whether or not to strike
  2. Seasonal factors–especially in soybean meal this time of the year
  3. Big short position in the market
  4. Dry weather in the #3 producing State in Brazil (Rio Grande Do Sul).

The maps above show the dryness over the last few weeks in the southern Soybean growing areas of Brazil. It is a bit late in the season to see a sharp reduction in total South American production. Recent heat and dryness has likely lowered Brazil soy production by at least 1-2 MMT from recent estimates.

Get the Answers

Some of our readers ask “will El Niño, La Niña, or different climatic variables, cause a summer rally in grains?” Others want to know, “Are we looking at more big crops?” Looking forward, farmers and traders can take advantage of my new service WEATHER WEALTH. This advisory offers the most accurate, and timely, global weather information for multiple commodities. There are some occasional trade tips as well. You can sign up for a free trial

Regards,

Jim Roemer

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