Recent consolidation of Soybean prices might imply in that future prices would be higher. JPMorgan’s new Soybean Crop Condition Index suggests the crop is in “much worse condition than average conditions since 1986.”
JP sees that the 2012 crop is in slightly better shape than the 1988 crop but it is suggeste that this could be the third-worst crop since 1964 in terms of actual yields relative to trend.
Critically, if long-term drier- and hotter-than-average weather occurs which is very likely to take place, there is a significant risk that the soybean yield will be on the decrease. As a result, forecasts could imply in an upside risk to soybean prices.
Moreover, light rain in the forecast for the US Midwest is might be not enough to reduce soil moisture stress: During this week, some precipitation affected the northern and eastern part of the Corn Belt but temperatures remained about 1°-to-5°C (2-to-9°F) above average. Current weather forecasts suggest that light rain will continue through the next 1-to-2 .