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Futures File: Soybean prices shoot higher amid dry weather concerns

Futures File: Soybean prices shoot higher amid dry weather concerns

Walt and Alex Breitinger

Walt and Alex Breitinger

Soybeans neared a one-year high Friday, exceeding $9.47 per bushel.

Prices are shooting higher on continued concerns that weather is too dry in much of the Midwest, especially in Iowa and Illinois, the nation’s top two soybean-growing states.

Meanwhile, China continues buying U.S. soybeans at a rapid pace, supporting prices. Rumors that Brazil, the world’s largest soybean exporter, may need to buy U.S. beans because of limited domestic supplies roiled markets as well.

These factors combined to help beans gain over 40 cents per bushel during the week, a jump of nearly 5%.

Gold sharply higher

In a decision pegged as having massive historic significance, Federal Reserve Chairman Jerome Powell announced on Thursday that the central bank will allow higher inflation rates in the future and not snuff out inflation by raising interest rates.

The Fed’s decision, disclosed at the Kansas City 44th Annual Economic Policy Symposium, required “robust updating,” which indicates that the Fed will allow inflation to rise above the Fed’s 2% goal following periods in which inflation has been below 2%.

Powell’s statements emphasized slow growth, low productivity and an overall difficult macroeconomic context. The COVID-19 pandemic and high unemployment were clearly factors in the landmark decision.

The sweeping change stimulated the stock market, caused a drop in the value of the U.S. dollar and, most dramatically, lifted precious metals prices toward the week’s end.

Gold for December delivery jumped over $1,980 per ounce by midday Friday while silver and platinum spiked as well.

Lumber sky high

Continued demand for lumber resulting from both increased housing starts and remodeling have created a shortage for virtually all building and home improvement products.

Rumors that the U.S. might impose a tariff on Canadian lumber is contributing to the rally, as Canada is a major source of lumber.

Since May, 2x4s have almost tripled and have seen enormous volatility as well. Lumber for September delivery topped $900 per thousand board feet on Friday morning, an all-time high.

Walt and Alex Breitinger are commodity futures brokers in Silver Lake, Kansas. They can be reached at 800-411-3888 or www.paragoninvestments.com.

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