Soybeans Rise to 10-Month High as Supply Sags More Than Forecast

Apr 09, 2014 3:10 pm ET

April 9 (Bloomberg) -- Soybean futures rose to a 10-month high after a report showed inventories trailed analyst forecasts for the U.S., the world’s biggest producer. Corn fell from an eight-month high, and wheat dropped.

Reserves of soybeans at the end of August will be 135 million bushels, compared with 145 million (3.95 million metric tons) estimated in March, the U.S. Department of Agriculture said today. Analysts surveyed by Bloomberg forecast 138.5 million. A year earlier, stockpiles were 141 million. Exports were projected at a record 1.58 billion bushels.

“Soybean supplies are going to be tight, and that increases the importance of producing a big crop this year,” Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview. “The market will continue to go up until we halt exports.”

On the Chicago Board of Trade, soybean futures for May delivery climbed 0.9 percent to settle at $14.9525 a bushel at 1:15 p.m. Earlier, the price reached $15.12, the highest for a most-active contract since June 6.

U.S. imports will surge 81 percent to a record 65 million bushels this year from 2013, the government said. Export sales in the marketing year that ends Aug. 31 were 44.51 million tons as of March 27, 3.5 percent more than the USDA forecast today.

‘Underestimated Exports’

“There’s a possibility that the USDA has underestimated exports with five months left to go in the marketing year,” said Jerry Gidel, the chief feed-grain analyst at Rice Dairy LLC in Chicago. “The supply tightness has not been resolved, so the surprise today is the market’s reaction is not more bullish.”

Corn futures for May delivery fell 0.9 percent to $5.0225 a bushel. Earlier, the price reached $5.19, the highest since July 12.

The government cut its U.S. estimate for inventories more than analysts predicted with the export projection increasing 7.7 percent from a month earlier. The agency raised its forecast for Brazil production to 72 million tons from 70 million.

“People are scared that the bigger Brazilian crop may reduce demand for U.S. exports,” Gidel said.

Wheat futures for May delivery fell 1.8 percent to $6.69 a bushel. Before the USDA report, the price reached $6.88, the highest since April 2.

The government said stockpiles in the U.S., the top exporter, will be 4.5 percent larger than forecast in March as demand for livestock-feed ebbed.

World stockpiles before the start of the Northern Hemisphere harvests this year will be 186.68 million tons, up from 183.81 million predicted in March, the agency said.