South American rainstorms increase oilseed supply problem
Most oilseed price outlooks this fall have noted how dry it has been in parts of Brazil and Argentina.
If drought truly gripped South American oilseed regions, a winter rally in soybean and canola prices was a possibility.
Well, it rained in Brazil and Argentina over the weekend, a real widespread soaker.
At the time of writing on Dec. 13, January soybeans on the Chicago market were below $4.50 (U.S.) a bushel, down 25 cents per bu. from the Dec. 3 close. That was the lowest price since last July.
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It is still early in the South American growing season and some analysts expect the rain will allow farmers there to add a few more soybean acres.
The big question facing the market is the trend. Were the weekend rains a break in the drought or will dryness return?
Only time will tell.
While things are bad in oilseeds, they are worse in wheat. Chicago wheat futures hit 22-year lows last week.
The United States Department of Agriculture increased its forecast for wheat carryover into the 2000-2001 marketing year.
Also depressing prices were reports of rain in parts of the parched U.S. winter wheat belt.
Overhanging agricultural commodity markets is the question of U.S. aid for Russia.
Last year, billions of dollars of food poured into Russia from the U.S. and Europe to make up for a disastrous grain crop and to calm fears of politically destabilizing hunger among Russians.
Western governments were eager to hand over food to lessen the price-depressing surpluses at home.
Russia has had another disappointing harvest and the lobby is on to get western governments to again devise big aid packages. But negotiations have stalled as western governments show disapproval for the Russian government’s war on the breakaway region of Chechnya.
The ebb and flow of these negotiations will no doubt continue to be a factor in agriculture commodity prices for months to come.
While there is little news about grain prices to cheer about, there might be some welcome news soon from the Canadian Wheat Board about pricing options.
Options the board has studied include being able to fix the price of the grain before the crop year begins. Another idea is where farmers can cash out before the end of the crop year and a third where farmers can borrow against late-year board payments.
Expect the CWB board of directors to make a decision soon on whether to offer these options for 2000-2001.
