As farmers head into the fields for spring planting, there is more uncertainty surrounding the grain markets. According to River Valley Cooperative’s Cody Forde, when looking at the soybean markets, the low prices we are seeing have to do with the currency spread between the United States and Brazil.
“It makes our commodity more expensive on the world market, which is essentially bearish to soybeans. With Brazil being such a large player, and their currency being important, you can see that if their currency isn’t rallying along with the dollar, it’s much cheaper for somebody like China, or someone looking for a lot of soybeans, to go in and buy from them,” says Forde. “We’ve also seen this increase in ending stocks post WASDE report that was a little bit more than what we expected, and that has added a bearish tilt to the market.”
Forde adds that even with talk of renewable fuels offsetting the gap, the demand hasn’t picked up fast enough to offset declining prices.
Feature Photo by Daniela Paola Alchapar on Unsplash
