Soy farmers see rally ending
By Jeff Wilson
CHICAGO — Minnesota farmer Bob Worth has sold most of his soybeans on bets the biggest rally in five years is about to end.
With futures up as much as 19 percent this year, Worth unloaded 75 percent of the crop he is growing on 1,100 of his 2,300 acres that won’t be collected until September and locked in prices for half his 2015 harvest, 15 months from now.
“We sold it when it was profitable because we don’t know how low it may go,” Worth, 61, said by telephone from Lake Benton, Minn.
Production in the U.S., the world’s largest grower, will jump 10 percent this year to an all-time high of 3.631 billion bushels, and inventories before the 2015 harvest will be double a year earlier, a Bloomberg survey of 25 analysts showed. Macquarie Group said soybeans may drop 14 percent to $10.50 a bushel, cutting feed costs for cattle, hog and poultry producers that are boosting output because of high meat prices.
“It’s a major shift to excessive supplies,” said Bill Gary, the president of Commodity Information Systems in Oklahoma City, who has worked in grain markets since 1960 and expects prices to drop below $10 during the harvest. “The rate of soybean usage is starting to level off, and production is ramping up. We will have too much.”
Planting of soybeans expanded this year as a slump in corn prices encouraged farmers to switch crops. Demand also surged for soy-based livestock feed, particularly from Chinese hog producers, which will leave U.S. inventories on Sept. 1 at 127 million bushels, or 3.8 percent of domestic use and exports, the lowest since before 1965, the Bloomberg survey showed. Once the 2014 crop is collected, stockpiles before the 2015 harvest will jump to 319 million, according to the survey. The Department of Agriculture will update its estimates of supply and demand at noon Wednesday in Washington.
Soybean futures for July delivery are up 15 percent this year to $14.5625 on the Chicago Board of Trade, the most to start a year since 2009.
Bloomberg fi le photo
A combine unloads a hopper full of harvested soybeans into a tractor-trailer on a farm in Fairfield County, Ohio, in 2013.