Soft commodities on Monday
Favorable weather conditions in the U.S. states, which are producing soft commodities decreased the price of corn, wheat, and soybeans. This weather conditions this summer had a positive effect on the crops. The mild temperature is suitable for the crops and coupled with rain increased the yield expectations for this year.
As a result, the price of wheat decreased by almost 1%. It is worth mentioning that during the last two out of three sessions wheat prices feel due to the oversupply. Another soft commodity, which is Corn, also suffered as the price corn prices decreased by 1.4%. The reason behind this recent fall is the price of most-active corn contract on the Chicago Board of Trade. The price of this corn contract decreased by 1.4% to $3.75-1/4 a bushel. For example, on Friday the price of corn increased by 2.6%.
Corn is not the only soft commodity which suffered due to favorable weather conditions. The price of soybeans decreased by 0.7% to $8.74 a bushel. On Friday, on the contrary, soybeans price rose by 1%. The trade war, which started over a year ago continues to affect the price of soybeans. Out of all of the U.S. agricultural products exported to China soybean export was the most profitable business. China imposed tariffs on soybeans imported from the U.S., and its price became less attractive for the local companies.
Weather conditions and Soft commodities
Weather conditions play a vital role when it comes to the agricultural sector. It is not surprising that the price of soft commodities is under the influence of such factors. This summer, favorable weather conditions affected the price of corn, soybeans, and other soft commodities.
Producers use the scale from 1 to 5 to evaluate the crop condition and also the yield potential. In this part of the article, we will discuss the state of crops in most of the states. To make it easier to understand how this scale works, let’s have a look at this system. For example, 1 one is the worst result, whereas 5 is the best result.
For instance, in Southern Minnesota corn condition remained at the same level at 4.25, which is a good result. Moreover, corn yield increased from 3.0 to 3.5.
In another U.S. state, Nebraska and more specifically Northeast Nebraska situation improved due to the favorable weather conditions. Corn condition rose from 3 to 4; meanwhile, corn yield increased from 3 to 3.5. At the same time, soybean condition reached four from the previous 3.5. However, soybean yield remained at 3.5. Thanks to the rain and weather conditions in general crop condition as well as yield potential improved last week.
Not all of the states which are producing the agricultural products raised the corn condition and yield potential. For example, in Indiana, the scores of corn as well as soybeans decreased by 0.25. The corn rating fell to 2.25, and soybeans score reduced to 2.75.
To sum up, favorable weather conditions in most of the states reduced the price of soft commodities. Another problem for the U.S. agricultural sector is the trade war between the U.S. and China.