Brazil is poised to surpass the U.S. as the world’s largest soybean grower, expanding a record surplus of the most-consumed oilseed as global output exceeds demand for the fourth time in five years.
Stockpiles used to make animal feed and vegetable oil will surge 18 percent to 72.4 million metric tons by September 2014, the biggest gain in four years and the highest pre-harvest total ever, according to the average of 18 analyst estimates compiled by Bloomberg News. Goldman Sachs Group Inc. says futures traded on the Chicago Board of Trade will retreat 16 percent to $10.50 a bushel in 12 months.
Brazilian farmers doubled output in the past 12 years, accelerating the expansion as prices rose to records in 2008 and 2012. The U.S. crop is rebounding from last year’s drought, and futures are now 30 percent below the all-time high of $17.89 set in September 2012. Cheaper soy may widen margins for chicken producers including Pilgrim’s Pride Corp.
"We are now moving from famine to feast in terms of global inventories," said Randy Mittelstaedt, the director of research at R.J. O’Brien & Associates in Chicago. "Farmers have responded to high prices the last several years with increased plantings and more production."
Futures dropped 11 percent to $12.53 this year in Chicago, compared with a 6.2 percent decline in the Standard & Poor’s GSCI gauge of 24 commodities. The MSCI All-Country World Index of equities rose 17 percent, and the Bloomberg U.S. Treasury Bond Index lost 2.2 percent.
Brazil will produce a record 90 million tons from the crop that Southern Hemisphere farmers start collecting in January, said Michael Cordonnier, the publisher of the Soybean & Corn Advisor in Hinsdale, Illinois. That’s up from 82 million a year earlier and more than the U.S. Department of Agriculture’s estimate in September of 88 million tons. Cordonnier said growers are planting more because soybeans offer better returns than corn, which has tumbled 40 percent this year on the CBOT.
The U.S. soybean harvest, which was 86 percent complete on Nov. 1, will rise to 3.215 billion bushels (87.5 million tons), 6 percent more than in 2012 and 66 million bushels more than the USDA predicted in September, according to the average of 36 estimates in the Bloomberg survey. Yields improved with August rain and warm weather in September and early October, according to the Linn Group, a Chicago-based broker and research company.
The USDA updates its monthly forecasts tomorrow, after canceling the October report during a government shutdown.