Sept. 12 (Bloomberg) -- Soybeans rose the most in two weeks after the U.S Department of Agriculture cut its forecast for the domestic crop by 3.3 percent, limiting prospects for supplies of animal feed and cooking oil made from the oilseed.
Farmers will harvest 3.149 billion bushels this year, down from 3.255 billion (88.6 million metric tons) estimated in August, the USDA said today in a report. Analysts surveyed by Bloomberg News forecast 3.134 billion. Yield forecasts were cut in nine Midwest states where drought expanded to 32 percent of the region on Sept. 10 from 2.2 percent three months earlier.
“Yield increases in the Delta and Southeast were more than offset by declines in the major producing states,” Dan Cekander, the director of grain-market analysis at Newedge USDA LLC in Chicago, said in a report. “The recent dry trend could potentially result in a further lowering of the soybean yield in the October production report.”
Soybean futures for November delivery jumped 2.8 percent to close at $13.96 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest gain for a most-active contract since Aug. 26. The U.S. is the world’s top producer.
The oilseed reached a record $17.89 on Sept. 4, 2012, as the most-severe drought since the 1930s cut supplies. Rain in late August and September that revived some crops last year failed to occur this quarter, Cekander said.
Oilseed processors including Bunge Ltd. and Archer-Daniels- Midland Co. may benefit from a global shortfall of soy-based livestock feed. The central Illinois processing margin, which represents the difference between the cost of a bushel of soybeans and the value of the meal and oil produced, more than doubled compared with the average in the past three years.
U.S. inventories on Aug. 31, 2014, before next year’s harvest, will be 150 million bushels, down from 220 million forecast in August and 295 million projected in July, the agency said. The average estimate of 34 analysts surveyed by Bloomberg was 165 million. Supplies this year were estimated at 125 million.
“The smaller-inventory forecast reinforces the tightening U.S. supply situation before next year’s harvest,” Dale Durchholz, the senior market analyst at AgriVisor LLC in Bloomington, Illinois, said in a telephone interview. “We are going to get a price rally to restrict soybean-meal consumption and encourage more planting in South America.”
Soybeans may reach $15, he said.
--Editors: Patrick McKiernan, Steve Stroth