Soybean Prices, along with Corn Prices, are expected to go up.
The Midwest continues to experience the worst drought in over 50 years as the outlook on soybean prices does not look good. Not only soybean prices will be effected, but corn prices are at a near record high as well. More than half of the state of the country’s top corn and soybean producer, Iowa, is facing severe drought.
The U.S. Department of Agriculture said the soybean crops haven’t been in this bad of a condition since 1988. The area usually receives about 6 to 10 inches of rain in June and July, but this year only about 1-1/2 inches fell. Besides the lack of moisture, the heat has been unrelenting for the crops. Dry scorching heat above 100 degrees has played a major role in corn prices going up over 50% during the previous weeks.
It is suggested that over 70% of the Midwest is in one stage or another of drought. Over 50% would be considered to be in severe drought. This is the reason for grain products reaching high prices.
One farmer suggests immediate rain could still save the soybean crop a bit. However, the Secretary of Agriculture, Tom Vilsack, suggests 77% of the soybean crop is in danger. During a White House press briefing, Vilsack said “Right now, we have indicated yields will be down about 20 bushels to the acre for corn and about 3 bushels to the acre for beans. That may be adjusted upward or downward as weather conditions dictate.”
Soybean prices are already up approximately 25% since early June. Soybean prices set for November delivery rose over 3% to $16.736 a bushel.
However, consumers will not likely see results of the drought products until later this year and into next. This occurs due to the fact that the full extent of the problem is not known until after all the crops are harvested.
Food prices normally rise 1% for each 50% jump in corn prices and are not as noticeable as fresh dairy or protein products. If the drought lasts much longer though, these prices may be jumping as much as 10% as well.
Although soybean prices and corn prices will be increasing, it may not be as noticeable to those who get these products through packaged applications. The prices of cereals and such are impacted more by advertising, packaging, processing and transport.