Continued ‘Bull Run’ for U.S. Farm Goods Means $11 Soybeans

(Bloomberg) -- Chicago agricultural futures extended a surge Thursday as dry growing conditions in South America forced global buyers to purchase more American supplies.

Soybean futures jumped as much as 2.4% to $11.1275 a bushel, the highest intraday level in four years.

Due to delayed plantings in Brazil and persistently dry weather there, top importer China may have to turn to U.S. soybeans for the February time period typically dominated by the South American harvest.

“We’re starting to hear some early signs of dryness in Argentina and Brazil at planting,” Pat Bowe, chief executive officer of Andersons Inc., said this week after the Ohio-based grains handler reported a rise in earnings. “So if that were to continue, or to persist, this bull run could continue to move up.”

Higher grain prices were contributing to rising food costs, with the United Nations gauge of food prices climbing for the fifth straight month.

Data released this week showed U.S. soybean shipments in September jumping 99%, helping China come closer to its buying commitments under the U.S.-China trade deal. And it’s just not soybeans -- weekly corn sales, mostly to Mexico, were the biggest in eight years, U.S. Department of Agriculture data showed Thursday.

India, which typically favors South American supplies, bought 33,000 metric tons of U.S. soybean oil, USDA said. And Egypt, the a top world wheat buyer, was tendering for global offers as well, according to traders.

“Export demand has been very robust, especially from China, which we expect to run well into the first quarter,” Bowe said. “The best part about an ag recovery is being demand led.”

Other agriculture markets have also been buoyed by adverse weather.

Arabica coffee jumped a second day this week in New York, helped by the weaker greenback and amid concern that flooding from storm Eta in Nicaragua and Honduras will destroy crops and cause disruptions to shipments.

©2020 Bloomberg L.P.