Soybeans hit a record high on Wednesday--$13.07 a bushel for July contracts. Soy prices jumped 75 percent in 2007, that's more than corn, oil, gold. MORE THAN GOLD!
Why? Because farmers decided to plant a bunch of corn to chase the ethanol dream, leaving less soy for the other hot new fuel--biodiesel, or to feed livestock, or to provide protein for the world's emerging middle class, or to satisfy health-conscious Americans who are increasingly choosing soy over diary. Now you know why Starbucks charges extra for soy.
This morning soybean prices pulled back because the USDA reported lower than expected export numbers. Now, I'm not saying we're in a bean bubble. We won't know that until farmers make their decisions this spring on what to plant. But I wouldn't be surprised if all those farmers being told by struggling ethanol producers, "Thank, but no thanks," start to think, "You know, those folks in China want my soybeans."
Just as Cramer always says "There's always a bull market somewhere," there's also always a bubble somewhere.
SPEAKING OF STARBUCKS