Our weather relates to so many things in our lives, especially our food supply.
If conditions are too dry or too wet during spring and summer, then crop yields decrease, and that usually leads to shortages and higher prices. Colder than normal weather, or early freezes, also can cause extensive crop damage.
One aspect of my job is to provide short- and long-range weather forecasts to clients who use the commodity markets. They want to know if a drought or a freeze is likely and when these events may occur. Farmers certainly want to sell their corn, wheat or soybeans when the markets are high. That’s the big challenge. If the crops are good, then the prices will usually drop.
Soybean commodity prices are expected to climb once we get through harvest pressures over the next several months. In August 2012, the price of soybeans topped at $17.78 per bushel in the nearby contracts.
It’s quite likely that soybean futures will hit $15 by spring. Current prices for soybeans are near $12.70 per bushel.
It already appears that demand for soybeans, and perhaps other crops, will be much higher for the 2013-14 season. There are reports of record exports of soybeans to China totaling 2.93 million tons. Sources say exports to China may be as much as half of the more than 3 billion tons of soybeans grown in the U.S.
In addition to large exports, heat and drought conditions in the Midwest have hurt the corn and soybean crops this summer, which has not allowed the corn and soybeans to “fill” properly. The soybean crop has been cut 15 to 20 percent in Iowa and Illinois due to the persistent dryness. And, cold weather north of Interstate 90 ended the 2013 growing season in the northern areas last week. There are also hints that China and other nations may buy more corn and wheat from U.S. producers. Assuming this happens, prices for corn could go higher by the end of this year. In other words, food prices are not expected to fall in the near future.
Next week, I’ll have more details for our fall and winter weather.