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Soybean prices on the rise, could impact other food sources

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David Brancaccio: The global price of food is tied in crucial ways to soybean prices. And the cost of soybeans is now hitting levels not seen just before the 2008 food crisis. When this happens farmers switch to soybeans and away from rice — that crucial staple of diets in so many parts of the world.

Jeremy Zwinger runs a commodity trade publication called “The Rice Trader.” Mr. Zwinger, good morning.

Jeremy Zwinger: Good morning.

Brancaccio: So, what is driving higher soybean prices?

Zwinger: Well, probably the easy answer is: oil. If you look at agriculture production, it always comes down to the cost per acre; and oil, of course, leads into gasoline, gasoline leads into fertilizer. So it’s all a related complex that comes together. As costs go up, so do the costs of soybeans.

Brancaccio: Now, when soybeans go up, this has wider impact, really throughout the globe?

Zwinger: That’s correct. I mean, if you go to higher prices in soybeans, usually you’re going to start stealing acres, which is what we’re seeing in the U.S. — in rice. Especially in Arkansas, which is the biggest rice-growing state, you’ve seen an amazing amount of conversion from rice to soybean.

Brancaccio: I also saw a report that another part of the problem is dry weather in some of the soy-producing regions of Latin America.

Zwinger: Brazil did have some major draught this year. And of course, that added back into the high Chinese demand. But interestingly, the draught in Brazil also affected their rice. So now you have tight supply in South America for soybeans and rice, and a lower production for rice in the U.S. You’re really setting up a regional shortfall.

Brancaccio: Jeremy Zwinger, who runs a commodity trade publication called “The Rice Trader,” thank you very much.

Zwinger: Thank you very much, I appreciate your time.

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