Soybeans Rise to 3-week High Due to U.S. Heat Wave

Soybean futures hit their highest since July on the Chicago Board of Trade as hot weather gripped the U.S. region where the crop is grown, raising concerns about the harvest. Today, on August 23, the markets sees a moderate downward correction, but the upward momentum still stays there. That price move happened after the period when, according to Reuters, the front month soybeans futures were unchanged, even though traders trimmed their net long in CBOT soybean futures and options to 50,719 contracts from 64,081 a week earlier.

According to the U.S. National Weather Service website, heat warnings have been in effect for several states, including Iowa, Illinois and Nebraska, which are major corn and soybean producers. While it is known to be very hot from mid- to late August, temperatures in those areas are expected to break numerous daily and possibly monthly records.

Agritel, a Paris-based consulting firm, notes that the "heat dome" could persist for more than a week, contributing to higher crop prices. The weather is of particular concern for soybeans as they are still in a critical phase of development, while much of the corn has already pollinated.

Traders will be able to get a better idea of possible yield performance as the Pro Farmer Crop Tour kicks off in the U.S. this week, with experts checking fields throughout the Midwest. Crop conditions have improved in recent weeks as rains have reached the soybean growing belt, mitigating the effects of the drought experienced earlier this summer.