Soybean futures rallied to a new record high on Thursday morning, with soybeans for September delivery pushing higher than $17.80 a bushel. The U.S. soybean crop still needs rain to finish developing. Despite the remnants of Hurricane Isaac dropping heavy rain on soybean-producing regions, many market participants fear it will be too little, too late, as was the case for corn two weeks ago.
The USDA is currently projecting that this year’s soybean crop will yield only 36.1 bushels per acre, down from last year’s yield of 41.5 bushels per acre. This could result in a significantly smaller crop this year, which has helped to contribute to the $6.50 (+ 58 percent) rally during the last eight months. Farmers, end-users and traders will be closely monitoring the USDA’s updated figures, due to be released Sept. 12. As of midday Friday, soybeans for September delivery were worth $17.65 a bushel.
Builders' materials rally
With recent news that U.S. housing may be turning upward, the raw materials that are essential to home building have gained strength as well. During the last year, national home prices, as measured by the Standard & Poor’s Case-Shiller index, rose 0.5 percent, breaking a two-year pattern of lower prices.
Copper, which is essential to the electric wiring throughout homes, sparked higher during the last two months, climbing 18 cents per pound (+ 5.5 percent). Nearly half of all copper is used by the construction industry, and many analysts believe that improving housing data has helped contribute to the current price, with copper for September delivery trading at $3.45 on Friday.
Lumber has benefited from a stronger housing market, climbing more than 10 percent during the last two months. Lumber futures, which are traded in units of 100 board feet at a time, were worth $290 per 100 board feet as of midday Friday.
Both lumber and copper have been imported by China to fill its expanding construction needs. The role of Chinese demand, or lack thereof, could continue to affect U.S. prices for these raw materials.