Soybean Prices Dropping on US Dollar, Strong Harvest

Soybean prices dropped to a two-week low as crops in the Midwest indicate they will exceed harvest expectations.

The U.S. Department of Agriculture’s projected a harvest of 3.43 billion bushels, while it has now been upwardly revised to 3.5 billion bushels, according to the newsletter run by the Professional Farmers of America.

In a Pro Farmer Tour which includes inspecting the fields, in Iowa alone the crop yields are up by 13 percent over projections in 2009. That's significant because Iowa is the largest producer of soybeans in the U.S.

Since the seven-month high of $10.49 reached on August 5, soybeans have declined 4.3 percent, and could go down as low as $9.60, say some analysts.

The U.S. dollar is another factor, as when it gains in value the price of soybeans in the U.S. fall to compensate for less interest from foreign buyers.

Until the dollar starts to pull back, it'll have a significant effect on the price of soybeans, combined with the larger harvest than expected.