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Can Unfavorable Weather Affect Soybean Producers’ Interest?

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Soybean prices advance

Soybean December futures contracts trading on the Chicago Board of Trade (or CBOT) rose by ~1.0% and settled at ~$9.1 per bushel on October 21, 2015. The prices for soybean futures rose due to unfavorable weather changes affecting South American supply sentiment. The Teucrium Soybean Fund (SOYB) followed CBOT and advanced by 0.96% on October 21, 2015.

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Weather conditions

Weather conditions in South America have turned mixed due to El Nino. Regions in northern Brazil and southern Argentina would be experiencing excessive dry weather with high temperature. At the same time, Regions in southern Brazil and northern Argentina would experience heavy rains. This would affect the soybean crop significantly.

The dry spell in the soybean-producing Brazilian region has been forecast once more. This could hurt the producers’ interest and supply sentiment in South America. As speculators are paying close attention to the South American supply, this reduced the pressure from the prices on October 21, 2015.

Soybean commercial and technical buying continued on October 21, 2015, as the prices were below 9$ per bushel, the US Department of Agriculture’s producer’s cost mark. Ample soybean inventories in the world’s balance sheets might be able to satisfy demand in the near term. There could be lesser chances of soybean prices rising significantly, even if the South American soybean supplies would be affected.

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Chinese demand for soybean and soybean products continued rising on October 21, 2015. The significant purchases of soybean oil at 20,000 tons attracted speculators’ attention following the previous two days of massive purchases. Soybean meal and soybean oil prices rose on October 21, 2015, due to the favorable export news.

Affected stocks

CVR Partners (UAN), Agrium (AGU), Chemical & Mining Co. of Chile Inc. (SQM), and Martin Midstream Partners LP (MMLP) fell by ~2.2%, ~1.8%, 0.65%, and 1.0%, respectively, on October 21, 2015. In contrast, the VanEck Vectors Agribusiness ETF (MOO) rose by 0.14% on the third trading day consecutively.

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