The market of soybeans has been rallying since august 10th 2011. Yesterday the price hit $14,65/ bushel, thus updating Feb’s high. There are several reasons for such market behavior:
Firstly, the crops in some states of the US keep being affected by drought. According to the latest research made by the USDA, the average yield of soybeans is 41.1 bushels per hectare. Moreover, the sowing keep being reduced. This year’s harvest is expected to be 83,168 MMT (= 3,056 B bushels), which is 169M bushels less than it was previously expected.
Secondly, some rating agencies report that the USDA overestimated its August forecast for soya production. The next report is to come out on Sep 12th.
Thirdly, China has the same problem - the crops are under threat because of droughts. Moreover, the reserves of soybeans are getting shorter. The production is declining as well, which means that China may increase the import of soybeans.
According to the Department of Commodity Trading, , the price will probably fail to overcome the resistance at $15/b as the market will see new harvests in the short run, which will press the price.
