Since the first week of December, March soybeans have rallied from $7.79 per bushel to more than $10 by early January.
Joe Victor, vice president of Allendale Research, says price action in soybeans this time of year is based on U.S. export demand and South American production levels. And estimates of first quarter usage from the United States is 985 million bushels, which would be a record, surpassing the 2006-2007 level of 954 million, and better than the three-year average of 892 million. Most of that demand is coming from China, which has bid up soybean prices in an attempt to lure people back to agriculture.
However, Chinese crushers now are finding it less expensive to import U.S. beans than to buy domestically, which is making up for a slowdown in U.S. crush demand. In February, he says March beans will trade between $11.80 and $12.25 per bushel.
South American beans are in the ground and they have suffered from a lack of rain, says Christy Olin, broker, RJO Futures. “They have technically broken out of the long-term downtrend and have seen a sustained run higher since early December,” Olin says. She expects a pullback in late January and a push higher into February. She pegs resistance at $11.50 and support is $9. “That would be a tough support for beans to break through again.”
