Soybeans Drive Market Bus Entering September

September 4, 2013 10:00 AM
Soybeans Drive Market Bus Entering September

As summer enters its final weeks, the eyes of the market are turning to soybeans and worries about dry conditions throughout the Midwest, experts tell the U.S. Farm Report Market Roundtable.

"Where I sit, the biggest concern, obviously, is a yield under 42 (bushels per acre) in soybeans," Greg Hunt, Archer Financial Services, told the Market Roundtable last week. "That’s what’s driving this market because traders are bouncing in. A yield at that or lower, you end up with an ending carry much like you saw last year, so that’s the fear-driven part of this game right now. The bean market needs three rains starting Aug. 1, and we haven’t had any."

One factor to watch: The price at which China begins to switch from U.S. beans to those from South America. Brazil is sitting on more beans this year than last—16 million metric tons, Hunt says.

Meanwhile, pay attention to the global wheat crop.

"Wheat’s kind of married to corn because we’ve been feeding a lot of wheat globally for the last year and a half in order to avoid feeding corn," says Alan Brugler, Brugler Marketing and Management. "The result has been that even though we’ve got record or near-record world wheat production, the wheat stocks are going to be at a four-year low. That should be price supported, but because we’re so dependent on the feeding aspect of it, if corn goes down, then wheat tends to go down, too, in order to keep feeding what we’re assuming it’s going to be."

Poor weather in South America might damage wheat and have repercussions for American farmers, Brugler says. Additionally, Canada is on track to experience its biggest wheat crop in 27 years, Hunt says.

Click play to watch Segment 1 of the U.S. Farm Report Market Roundtable:

Click play to watch Segment 2 of U.S. Farm Report Market Roundtable:

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