Bloomberg News

U.S. Soybean-Reserve Estimate Cut on Smaller Crop Forecast

July 11, 2012

U.S. soybean inventories before next year’s harvest will be 7.1 percent smaller than forecast a month ago as unusually hot, dry weather reduces this year’s crop production, the government said.

Supplies will total 130 million bushels on Aug. 31, 2013, down from 140 million projected in June, the U.S. Department of Agriculture said today in a report, cutting its estimate for a third straight month. The average estimate of analysts and traders surveyed by Bloomberg News was 137 million bushels. U.S. production will total 3.050 billion bushels, down 4.8 percent from 3.205 billion forecast last month and 3.056 billion in 2011, the USDA said..

“It’s a bare minimum carryover supply,” Anne Frick, the senior oilseed analyst for Jefferies Bache LLC, said yesterday in a telephone interview. “We have to somehow ration usage around the world, or at least postpone usage until next February when South America is expected to harvest a big crop.”

Through yesterday, soybean futures on the Chicago Board of Trade rose 27 percent this year, partly because output declined in Brazil, the world’s second-biggest producer, and Argentina, the third-largest. On July 9, the price touched $15.7125, the highest for a most-active contract since July 2008. The U.S. is the top grower.

Smaller soybean inventories may boost prices for products including livestock feed, a key expense for meat producers such as Tyson Foods Inc. (TSN:US) and Smithfield Foods Inc. (SFD:US)

World soybean production in the year beginning Oct. 1 may total 267.16 million metric tons, less than 271.03 million forecast in June, the department said. Global output was estimated at 235.88 million tons this year.

Global inventories on Sept. 30 will fall to 52.51 million tons, from 53.36 million forecast in June and 70.1 million a year earlier, the USDA said. World suplies before the 2013 North American harvest will total 55.66 million tons, down from 58.54 million estimated last month, the USDA said. Analysts surveyed by Bloomberg expected 2013 stockpiles to fall to 56.74 million, on average.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth in Chicago at sstroth@bloomberg.net.


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