Bloomberg News

Goldman Lowers Soybean Price Forecast 12% on Higher U.S. Output

November 11, 2012

Goldman Sachs Group Inc. cut its soybean price forecast by 12 percent after the U.S. government raised its domestic crop estimate, boosting global supply.

Soybeans tumbled as much as 1.9 percent to $14.235 a bushel on the Chicago Board of Trade, the lowest level in more than four months, after the U.S. Department of Agriculture increased its estimate for global stockpiles by 4.3 percent from a month earlier. Higher yields in the U.S. are set to boost production by 3 million metric tons, it said.

“Risks of critically tight soybean inventories continue to fade quickly,” Damien Courvalin, a Goldman analyst said, cutting the three-month forecast to $16.50 a bushel in Chicago from $18.75. The increase in the USDA’s yield estimate “will weigh on soybean prices near-term,” he said.

Declining prices of soybeans, crushed to make cooking oil and feed for chickens and pigs, may help push down global food costs tracked by the United Nations, easing concerns among governments around the world already struggling to counter slowing economic growth. The index of 55 food items slipped 0.9 percent in October from a six-month high in September, as prices of grains, cooking oils and fats declined, the UN Food & Agriculture Organization said Nov. 8.

Goldman also cut its three-month estimate for corn to $8.25 a bushel from $9 after lowering its forecast for oil and for reformulated gasoline for blending with ethanol.

“The largest uncertainties are now on the demand side, as we enter the third month of the 2012-2013 marketing year,” Courvalin said. “Weekly corn exports and ethanol production will remain weak near-term, keeping corn prices range bound in coming weeks.” Lower corn prices may also drag down wheat futures, Courvalin said. Goldman cut its three-month wheat forecast to $9.50 a bushel from $10.25.

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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