U.S. soybean future prices are on the rise amid continued Chinese demand and concerns of tight global supplies, putting markets in a “rationing” mode, according to a Cargill executive.

“I would think that we haven’t hit the top yet because of the question … of rationing,” says Joe Stone, Cargill’s head of corporate trading and executive vice president for the agricultural supply chain. “I think a function of the market today is to ration - that we’re probably going to have to go a little bit higher than we are today.”

Soybean futures rose sharply Tuesday and jumped again on Wednesday. The price for January delivery closed Tuesday at $13.50 per bushel, up 33.5 cents for the day, and was above $13.60 Wednesday afternoon.

All eyes are now on the arid weather in Argentina, Stone said in a USSEC webinar Wednesday. If the dryness there continues late into this month ahead of harvest, that will push prices higher, he said. If much needed rains arrive soon, prices could be close to the high mark for the year.

“If we’re in a position where Argentina is coming out at under 50 million metric tons … that’s potentially extending the primary export window for the U.S.,” said Mac Marshall, vice president of market intelligence for the United Soybean Board and the U.S. Soybean Export Council.  “Capturing that share, there’s a tradeoff and that’s going to be on the domestic availability side.”

Some of Argentina’s soybean farmers have benefitted from recent beneficial rains, but pervasive dry weather prompted the USDA Foreign Agricultural Service to office in Buenos Aires this week to cut its production forecast by 1 million metric tons, down to 50 million tons.

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Later planted soybeans are anticipated to have slightly lower yields than earlier planted fields,” the FAS analysts said. “Of the four largest soybean growing provinces, only Santa Fe has received adequate rainfall, and even there, more rain has fallen in the north than in some of the richer farmland in the south of the province.”

“We are going to need to ration,” Stone said. “And really the extent of how much we’re going to have to ration is probably going to be a function of the weather that we see in Argentina … We look from the surpluses we had back in June and July to where we sit today. We’re getting a whole cycle in one year. Demand rationing will likely be needed and we’re already watching Argentina weather very closely to see the extent of that.”

John Baize, a USSEC analyst, added, “We don’t have enough supply in the world right now.”

Meanwhile, demand continues strong in China as the country rebuilds its swine herds and fills its stockpiles, said Stone.

“I’ve been amazed at how quickly China has recovered from (African swine fever),” said Stone. "We’ve got a significant crush business in China. We also have a very large feed business in China and that recovery has really exceeded expectations.”

But Stone also said China is busy rebuilding its stockpiles.

“There’s no doubt that China let the reserves go down over the course of the past four-to-five years,” he said. “As a result of that, I think (China has) stock levels to a point where they need to be filled. And as a result of that, we see a very, very strong appetite for China, both on the soy side and the corn side. I think our expectation would be that’s going to continue and it’s very hard to say how long that will continue.”