Soybean Prices Surge as South American Outlook Deteriorates

Drought in South America and higher prices for fertilizer have pushed up the price of soybeans (WSJ, Feb. 2022). Here are five questions.

1. How does a drought in South America (SA) affect the supply and demand of soybeans in SA? The equilibrium price and quantity of soybeans in SA?
2. How do the changes you describe in Q1 affect the supply and demand and equilibrium price of soybeans in the USA?
3. How does an increase in price of fertilizer affect the supply and demand and equilibrium price of soybeans in the USA?
4. What predictions about the equilibrium price and quantity of soybeans in the USA do your answers to Q2 and Q3 yield?
5. Why have farmers in the USA shifted from planting corn to planting soybeans as the price of fertilizer increases?