• Wed. Feb 28th, 2024

Soybean market volatility depends on the weather

Soybean market volatility depends on the weather

Here is the growing season. Want to know where prices are going? We know the answer. It’s all about the weather. If last night’s rains are wider and heavier than expected, prices will quickly adjust and the market will turn its attention to the 3-day, 7-day, and 30-day forecasts.

The unpredictable weather during the growing season makes summer a volatile period for prices. The accompanying chart illustrates the volatility. The chart shows the percentage of years in which the monthly price range for November soybean futures prices was greater than 10% of the price on the first trading day of the month. Consider the current market as an example. November soybean futures are trading near $12/bu. History since 1990 suggests we have about a 50% chance of experiencing a price ceiling of $1.20/bu. (10% of $12) or more in June and July.

Data source: CBOT closing prices for November soybean futures.

The war in Ukraine continues to dominate the news. Demand for soybeans in China continues to be headline news. But the growing season is here, and nothing is more important than the weather and its influence on crop development.

With 20/20 hindsight I can say that I wish I had been more aggressive with new crop sales earlier in the year. “I should have sold more” is the lament of the seller in a bear market. Rewriting the “shoulds” isn’t helpful. Let’s hope that the price movement in June and July will provide another opportunity to get more soybeans and corn at higher quality.

#Soybean #market #volatility #depends #weather

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