Soybeans Drop as USDA Surprises Analysts With Record Yield View

September 12, 2016 02:09 PM
 
soybeans

The U.S. soybean crop already widely expected to break previous records, will be even bigger than previously thought, according the latest government forecast.

Yields this season will reach a record 50.6 bushels per acre, the U.S. Department of Agriculture said Monday. That exceeded all the estimates in a Bloomberg survey and will push production to an all-time high. Soybean futures in Chicago fell the most in two weeks after the agency released its report in Washington.

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The “USDA got a lot more aggressive on yield than what the trade was expecting,” Ted Seifried, chief market strategist at Zaner Group LLC in Chicago, said in a telephone interview. Prices “should be under pressure on the idea that we’ve got to move a lot of beans in the next few months,” he said.

For a recap of TOP Live blog coverage of the USDA report, click here.

Soybean futures for November delivery dropped 1.5 percent to $9.655 a bushel at 1:07 p.m. on the Chicago Board of Trade, heading for the biggest drop for the contract since Aug. 25. Prices fell for the first time in seven sessions.

More Sowings

The USDA said domestic production will rise to 114.33 million metric tons, up from from the 106.93 million forecast last month after farmers planted record acres.

The big crop could leave farmers and grain elevators squeezed on space to store excess supplies. U.S. soybean inventories before the 2017 harvest will rise 87 percent to 9.95 million tons, the highest in a decade, the USDA estimates. Stockpiles are climbing as the USDA lowered its outlook for imports by China, the No. 1 consumer, to 86 million tons, down from 87 million forecast a month earlier.

Higher U.S. soybean supplies are compounding a global glut of oilseeds. The agency forecast bigger world production this month, as increased peanut, cottonseed, and sunflowerseed output offset a reduced outlook for rapeseed.

The agency is also forecasting a record U.S. corn crop. Domestic production forecast at 15.093 billion bushels exceeded the 14.951 billion average estimate from analysts surveyed by Bloomberg. Reserves before the 2017 harvest will rise to the highest since 1988, boosting global inventories to an all-time high.

Corn futures for December delivery dropped 0.4 percent to $3.395 a bushel on the CBOT, snapping three straight sessions of gains.

Wheat was the only one of the big three U.S. crop futures to hold gains after the USDA report. The agency lowered its expectation for world inventories, citing a smaller European crop and increased global food and feed demand amid low prices. The stockpiles are still forecast to rise to a record. Futures for December delivery on the CBOT traded 1.2 percent higher at $4.085 a bushel.

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