Weather once again is the main focus for crop markets, but soybean markets are especially catching the eye of Midland Research analyst Jerry Gidel.
“I’m anticipating a chance we could pop through this $15 for (the August contract),” Gidel said. “We might get another 50-60 cents and bring November up to $14.30 or $14.50 – something like that. I’m anticipating to make some sales.”
Gidel said the reason for optimism in the soy markets comes as traders don’t feel like yields will surpass the 52 or 53 bushel averages in recent reports. Dry weather and other setbacks may drag on yield, as well as fewer acres of beans means supply could get tighter.
“Beans are right up there near their highs and both corn and beans are not projected highly on the good-to-excellent ratings at this point,” Gidel said. “Northern Iowa, the Dakotas and parts of Central Missouri are not in great shape. There have been some rains around but I don’t think anyone is expecting record yields.”
While soybean supply may be tightening, the demand side of the equation may be the determining factor on just how high prices can go. Gidel said China has been “biting their tongue” on purchases, getting only what they need right now, while Argentina doesn’t figure to be a big player this year on the export market. Brazil will be the biggest competition, but they may see limitations soon.
“I think there will be some support coming out of (South America) because right now there’s going to be a certain portion of Brazil’s crop going to Argentina to keep their processing going,” Gidel said.
While the supply and demand picture takes shape, the ongoing war between Russia and Ukraine adds to the volatility of the market. Russia plans to not renew the Black Sea Grain Deal, which will significantly impact Ukraine, and with global tensions high surrounding NATO and other purchasing countries, a lot can happen in a short period of time.
“(Ukraine) may get some shipments out of there, but it’s going to be significantly reduced,” Gidel said.