Strong price increase for soybeans and other agricultural commodities

In recent months there has been an impressive escalation in the prices of agricultural commodities, with an increase of soybeans of 140 dollars in one year.

International food prices are at the highest levels in recent years. This Tuesday (January 5), a ton of soybeans surpassed $500 in Chicago, its highest value since July 2014, and corn and wheat also posted peaks.

The price of soybeans in the US market increased by more than 44% in one year, if we take into account the US $ 346 from a year ago compared to current values.

Thus, the rise in raw materials is part of the global phenomenon of increases in financial assets and other shelters of value that results from the enormous injection of liquidity made by the US Federal Reserve and other central banks in the world, and that have the price of the dollar in decline.

There are several factors that explain this movement.

“Strong demand from China coupled with historic levels of soy processing in the United States are pushing up bean prices. To these two factors must be added the dry climate in many producing regions and fund positions that seem to speculate with increases in commodities, in a scenario of low international interest rates”, explains a report from the Rosario Cereal Exchange, Argentina.

Strong demand from China wiped out all of Brazil's soybeans and made 30 million tons in the United States, which opened a big hiatus in the "trade war" between the two powers.

There is also uncertainty as to the yields that the harvest of Brazil, Argentina, and Paraguay will have based on water problems.

On the financial side, the monetary issuance packages of dollars and low-interest rates in the midst of the pandemic crisis also drive prices of physical assets and alternative investments, such as commodities.

In addition to soybeans, both corn (close to $ 200) and wheat ($ 240) are at their highest values ​​in six years.


By: NewsFlare (110616.00)

Tags: Strong price increase for soybeans, Agricultural commodities, News

Location: Chicago