U.S. soybean inventory estimate cut on rising global demand
CHICAGO -- U.S. soybean supplies before the next harvest will be 7.4 percent smaller than forecast a month ago and the smallest since 2004 on rising demand for last year's drought-reduced crop, the government said.
Stockpiles on Aug. 31 will fall to 125 million bushels (3.4 million metric tons), down from 135 million estimated in January and 169 million a year earlier, the U.S. Department of Agriculture said Friday in a report. The average estimate of 31 analysts surveyed by Bloomberg News was 130 million. Soybean prices have dropped 17 percent since a record in September as South American farmers planted more for a harvest just getting under way.
"This is a signal to the market that prices are not high enough to slow demand for tightening supplies in the U.S.," said James Gerlach , the president of A/C Trading Co. in Fowler, Ind. "It's going to be very tough to buy supplies in the U.S. this summer."
Reduced supplies have cut margins for meat producers Tyson Foods Inc. and Smithfield Foods Inc., which buy soy- based animal feed. Oilseed processors such as Bunge Ltd. and Archer-Daniels-Midland Co. may benefit from an animal- feed shortage. The central Illinois crush spread -- the difference between the cost of a bushel of soybeans and the value of the meal and oil it can produce -- is more than 50 percent higher than the average of the past two years.
Soybean futures for March delivery rose 0.1 percent to $14.885 a bushel at 9:22 a.m. on the Chicago Board of Trade. Soybean meal for March delivery added 0.1 percent to $438.1 for 2,000 pounds. The high-protein animal feed surged 34 percent in 2012 and has climbed 4.5 percent this year.
The forecast for U.S. crushings of soybeans into animal feed and cooking oil in the marketing year that began Sept. 1 was raised to 1.615 billion bushels, from 1.605 billion estimated in January. The previous year's total was 1.703 billion. Sales of soybean meal as of the end of January were up 43 percent from a year earlier, while soybean-oil export sales tripled.
The average farm-gate price this year will be a record $14.30 a bushel, compared with $14.25 estimated a month ago and $12.50 last year, the USDA said.
World soybean production will total 269.5 million tons, more than the 269.41 million forecast in January, according to the report. In the previous year, output was 238.73 million tons.
Brazil is projected to pass the U.S. as the top producer for the first time. Its output was forecast at a record 83.5 million tons, up from 82.5 million estimated in January and 66.5 million a year ago. Analysts expected production to rise to 82.7 million, on average. The U.S. crop is forecast at 82.06 million tons.
Argentina, the biggest shipper of soy-based animal feed and vegetable oil, may harvest 53 million tons, down from 54 million estimated last month and up from 40.1 million last year, the USDA said. Analysts expected 52.9 million tons.
Global inventories of the oilseed on Sept. 30 will be 60.12 million tons, up from 59.46 million forecast in January, the USDA said. A year earlier, supplies totaled 55.25 million. Analysts surveyed by Bloomberg expected 59.07 million, on average.