Soybean futures slump after US upgrades ideas of world stocks

12.04.2017

Grain futures tumbled, as US officials issued larger-than-expected estimates for global stocks.

In the latest world agriculture supply and demand estimates from the US Department of Agriculture, lifted global ending stocks numbers across the board.

"There was not an overwhelmingly bearish number, but virtually every number was  slightly negative to negative," said Darell Holaday, at Country Futures.

Wasde soybean forecasts, change on previous and (on market forecast)

US stocks, close of 2016-17: 445m bushels, +10m bushels, (-2m bushels)

World stocks, close of 2016-17: 87.4m tonnes, +4.6m tonnes, (+3.2m tonnes)

Argentine production: 56.0m tonnes, + +500,000 tonnes, (+unchanged)

Brazilian production: 111.0m tonnes, +3.0m tonnes, (+1.0 tonnes)

Source: Agrimoney.com, Reuters, USDA

Kim Rugel, at Benson Quinn Commodites, saw "markets lower as increase in world stocks corn, beans and wheat all surprise above average estimates".

Big South American soybean crop

Ideas of global soybean stocks for the end of 2016-17 were lifted by a hefty 4.6m tonnes, to 87.4m tonnes, reflecting higher South American production.

This would represent a new record, and was 3.2m tonnes bigger than average analyst expectations, and would be a rise of 10.3m tonnes year-on-year.

The increase was driven by an increase of some 5.4m tones to ideas of global production, almost all of which was from South America, with the forecast for Brazilian production lifted by 3.0m tonnes, 1.0m higher than analyst expectations.

There was a slight upgrade to crush, with EU and Chinese imports lifted.

May soybean futures were down 0.5% in afternoon deals, at $9.37 ј a bushel, having broken fresh one-year lows of $9.29 ѕ a bushel.

'Optimistic' Brazilian corn number

Wasde corn forecasts, change on previous and (on market forecast)

US stocks, close of 2016-17: 2.32bn bushels, unchanged, (-25,000 bushels)

World stocks, close of 2016-17: 223.0m tonnes, +2.3m tonnes, (+900,000 tonnes)

Argentine production: 38.5m tonnes, +1.0m tonnes, (+700,000 tonnes)

Brazilian production: 93.5m tonnes, +2.0m tonnes, (+1.0 tonnes)

Source: Agrimoney.com, Reuters, USDA

Global ending stocks for corn in 2016-17 were lifted by 2.3m tonnes, beating analyst expectations by some 900,000 tonnes.

The upgrade was driven by upgrades to production in Argentina, Brazil, and South Africa, among others.

Richard Feltes, at RJ O'Brien, noted that the forecast for Brazil was "a somewhat optimistic reach as safrina corn hasn't pollinated".

Mr Fetles posited that "USDA Meteorologists in lock-up expressed confidence that wet pattern across safrina corn areas will continue".

May corn futures were down 0.3%, at $3.65 ѕ a bushel in afternoon deals.

Wheat finds support

The USDA also lifted its idea for wheat stocks at the end of next season, thanks largely to an upgrade in carryover stocks from the 2015-16.

Wasde corn forecasts, change on previous and (on market forecast)

US stocks, close of 2016-17: 1.16bn bushels, +300,000 bushels, (+70,000 bushels)

World stocks, close of 2016-17: 252.3m tonnes, +2.4m tonnes, (+1.7m tonnes)

Source: Agrimoney.com, Reuters, USDA

The higher carry-in was the result of lower consumption, particularly in the EU.

Global consumption for 2016-17 was also lowered, due to smaller demand from the US.

But wheat futures found some support, bouncing back to $4.21 Ѕ a bushel in afternoon deals, up 0.6% on the day.


agrimoney

Readers choice: TOP-10 articles of 2016 by UkrAgroConsult