Soybean market will react if La Nina returns to Brazil


Soybean market will react if La Nina returns to Brazil

The Brazilian soybean crop isn’t even in the ground yet, but a market analyst says the slightest possibility of another La Nina weather pattern in Brazil will be a market mover.

Christ Trant with hEDGEpoint Global Markets says despite last year’s La Nina Brazil completed harvest with record high yields and production, but may not get lucky twice if La Nina brings another dry season.

“The global balance sheet needs to have a record Brazil crop.”

The global balance sheet is so tight that any significant loss of yield would send prices sharply higher, limiting end user demand and limiting trade. Therefore, he says it will only take a slight yield reduction for prices to skyrocket.

“Just the rumor of La Nina kind of lurking its head will be enough to move prices and if it does occur it won’t take much to have a large price event to correlate with that.”

The National Oceanic and Atmospheric Administration (NOAA) currently predicts a 55% chance that La Nina will return this fall and last through winter in the northern hemisphere, with a 70% chance from November to January. Soybean planting in Brazil typically begin in mid-September with harvest wrapping up in April.

The Illinois Soybean Association hosted Trader for a soybean market webinar Tuesday.