Bloomberg News

Soybeans Post Longest Slump Since 1973 on Rising World Supplies

July 11, 2014

Record U.S. Soybean Crop Spurs Storage Crunch as Prices Drop

Farmers across the nation have almost finished planting what the government estimates is an all-time high of 84.8 million acres of soybean crop. Photographer: Daniel Acker/Bloomberg

Soybean futures capped the longest slump in 41 years after a government reported showed supplies will climb in the U.S., the world’s biggest grower. Corn fell to a four-year low.

Stockpiles of soybeans on Aug. 31, 2015, before next year’s harvest, will total 415 million bushels, the U.S. Department of Agriculture said today. That’s up from 325 million (8.84 million metric tons) forecast in June. World inventories will be a record 85.31 million tons, compared with 82.88 million predicted last month. Traders expected 84.69 million, on average.

Prices for the oilseed used in animal feed and biofuel slumped 17 percent in the past 12 months. Rising supplies are helping to keep global food inflation in check, with the United Nations reporting a third monthly drop in prices in June. Bigger crops also increases the chances of lower costs for buyers including Tyson Foods Inc.

“This is a bearish supply freight-train hitting the market,” Dale Durchholz, the senior market analyst for AgriVisor LLC in Bloomington, Illinois, said in a telephone interview. “Rapidly rising U.S. and global inventories” are coming, he said.

Soybean futures for November delivery fell 1.6 percent to close at $10.75 a bushel at 1:15 p.m. on the Chicago Board of Trade. Prices declined for a 10th consecutive session, the longest streak since July 1973.

Farmers will harvest 3.8 billion bushels this year, compared with 3.635 billion estimated in June and last year’s crop of 3.289 billion, the USDA said. Analysts surveyed by Bloomberg News expected 3.789 billion. The USDA raised its forecast for reserves left from last season’s crop to 140 million from 125 million estimated last month.

Cool Weather

Most crops are in good or excellent condition after ample rain, USDA data show. Cool weather in the Midwest will prevent heat stress on plants through next week, according to MDA Weather Services.

Rising supplies will cut feed costs for producers of poultry, hogs and cattle, making it easier to increase meat production after wholesale-beef and pork prices reached records this month. Margins for Archer-Daniels-Midland Co. (ADM:US) and Bunge Ltd. (BG:US) will probably improve with more bushels to process and export.

Corn futures for December delivery fell 2 percent to $3.8475 a bushel, after touching $3.825, the lowest since July 2010. The grain entered a bear market this month.

Domestic reserves of corn on Aug. 31, 2015 will total 1.801 billion bushels, compared with 1.726 billion forecast in June, the USDA said. Global inventories will be 188.05 million tons before the start of the 2015 harvest, up from 173.42 million estimated for this year and the most since 2000.

“The looming issue here remains weather,” Rich Nelson, chief strategist at Allendale Inc. in McHenry, Illinois, said in a telephone interview. Mild temperatures will aid crop pollination, and that “has very big yield implications,” he said.

To contact the reporters on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net; Megan Durisin in Chicago at mdurisin1@bloomberg.net

To contact the editors responsible for this story: Millie Munshi at mmunshi@bloomberg.net Joe Richter, Steve Stroth


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Companies Mentioned

  • ADM
    (Archer-Daniels-Midland Co)
    • $48.12 USD
    • -0.31
    • -0.64%
  • BG
    (Bunge Ltd)
    • $74.42 USD
    • -0.88
    • -1.18%
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