Soybean prices rise thanks to South American drought
Soybean farmers across the Midwest may be able to cash in on prices shooting ever higher. Ongoing drought in South America’s major soybean producers Brazil, Argentina and Paraguay has those countries cutting their estimated soybean output, which raised global soybean prices.
USDA cut its global oilseed production forecast by 5.2 million tons in the last month as South American drought conditions persisted, according to the latest World Agricultural Supply and Demand Estimates (PDF). That drop in expectations is all thanks to foreign production.
Brazil soybean production is forecast at 66 million tons, down 2.5 million from last month as warm temperatures and a lack of rainfall since late February in the southern state of Rio Grande do Sul further reduced yield and production prospects. Argentina and Paraguay soybean production estimates also are further reduced this month, reflecting the damaging effects of this year’s drought.
Drought conditions have dogged agricultural regions in much of South America for months, setting output back.
“Since December, USDA has cut its projection of Brazil's crop by 12 percent, and Argentina's by 13 percent,” Reuters’ Charles Abbott wrote.
The report pushed soybean prices near to their highest level since 2008. In today's global market, farmers close to home may be able to make more money thanks to far away environmental conditions.