War in Ukraine, interest rates, weather patterns, conditions in China – they all affect the soybean market, and they’re all in flux right now.
In a 2022 year-end edition of his “Best Weather Report,” meteorologist Jim Roemer issued his assessment and predictions of the current and long-term soybean market. He said the unique conditions of current world events have caused enormous price swings in major commodities, and that currently we are in the midst of a “commodity supercycle.”
Roemer explained a commodity supercycle is defined as an extended period of boom and bust in the commodities markets, with prices falling significantly above or below their long-term trends. “These movements may even outlast the business cycle, and typically persist for well over a decade,” he noted.
Soybeans, currently trading at near-record highs, are particularly weather-dependent. Roemer said La Nina and El Nino patterns are a major factor for both U.S. and South American soybean yields, and affect soybean prices more than 70% of the time.
Many forecasters predict a strong El Nino pattern in spring 2023, but Roemer believes current models are shaping up to look similar to 2008-09, in which the summer of 2009 saw a very weak El Nino event.
“I am not as convinced as others that a full-fledged El Nino event will develop in 2023, but perhaps more like just a “neutral event” between La Nina and El Nino,” Roemer predicted. Based on his current weather assessments, he projects a huge Brazilian soybean crop, but below-standard yields in Argentina due to lingering La Nina conditions there.
In terms of U.S. weather, he said history would indicate an easing of the Midwestern drought over the course of this winter and into the 2023 spring and summer. And, also based on historical trends, Roemer said that strong soybean rallies like we’re seeing currently usually are followed by a bear market that lasts at least a year.
China remains another wildcard in the soybean market. “Soybean exports have been soaring again,” he stated. “This market will be driven not only by weather…but what happens with China lockdowns (or not) and the global export picture.”
All told, Roemer’s net prediction for soybeans is a fairly dramatic one: “If La Nina ends, soybean prices could crash $2.00 to $4.00 by later in the summer.”
For more on nutrition, read:
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