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Futures File: Soybeans stage rally, gasoline gears up

Futures File: Soybeans stage rally, gasoline gears up

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Soybeans Stage Rally

US soybean farmers welcomed a healthy rally this week, after having endured a month-long belly-flop which coincided with the beginning of harvest.

November bean futures opened at $11.58 per bushel on Monday morning, shot 19 cents/bu higher and never looked back all week. Bolstered by a USDA report which showed a yield of 41.5 bu per acre (versus an expected 42 bu per acre), investors bought up the beans, bidding as much as $12.75 early Friday morning.

Prior to harvest, soybean prices had exploded to over $14.50 per bushel, as markets were gripped with anxiety that soybean yields would fall short of expectations. Prices plummeted $2.00/bu. during the first two weeks of harvest, as bean counters saw healthier yields on the new crop than they had been bracing themselves for.

With over 50% of the harvest now complete, fears of anemic yields have now been put to bed. However, new rumors of buying from Asia are brewing, as are reports that beans still left in the fields may have low protein content. November soybean futures were trading at $12.65/bu late Friday morning.

Gasoline Gears Up

Although many drivers were pleased with a recent drop in fuel prices, they may begin feeling the pinch of higher gasoline prices in the coming weeks. Over the last eight trading sessions, gasoline futures have risen 36 cents per gallon (+14.5%). This rally has been fueled by increasing unrest in the Middle East, especially on the potential for backlash against Iran for the alleged plots hatched against Israel and Saudi Arabia.

Furthermore, U.S. gasoline stockpiles have been declining over the last few weeks. The primary reason for the decline in gasoline supplies was a general slowdown in refining, with refineries nationwide running at only 84.2% of maximum capacity last week. Many refineries are undergoing maintenance as they retool their refining process to make winter-grade gasoline and focus more on producing heating oil, which is used as the heating fuel by nearly 8 million households nationwide.

Some analysts believe that prices could fall if these short-term problems are alleviated, but for now, drivers may have to prepare for higher prices.


Opinions are solely the writer's. Walt Breitinger is the president of Breitinger & Sons LLC, a commodity futures brokerage firm in Valparaiso, IN. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.

 

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