U.S. federal forecasters on Wednesday boosted their outlook for domestic soybean stockpiles while trimming estimates for global grain and soybean reserves.
The Agriculture Department said in its monthly crop report that U.S. soybean inventories would reach 460 million bushels at the end of the 2015-16 season on Aug. 31, 10 million more than its February forecast and slightly above analysts’ expectations.
“Bigger picture, we’re swimming in corn, beans and wheat,” said Doug Bergman, an analyst at investment firm RCM Asset Management in Chicago.
The higher supply outlook comes as the government trimmed its estimate for U.S. soybeans crushed to make products like soybean meal, an animal-feed product for chickens and pigs.
The USDA projected global soybean stockpiles for the 2015-16 season will total 78.9 million metric tons, lower than the 80.4 million it projected last month.
Soybean futures for May, the most actively-traded contract, rose 1 1/4 cents, or 0.1%, to $8.85 3/4 a bushel at the Chicago Board of Trade. Lightly traded March futures added 2 1/2 cents, or 0.3%, to $8.80 a bushel, the highest closing price since Feb. 22. Corn futures were mixed, while wheat rose.
The muted reaction to Wednesday’s report comes as grain and oilseed prices have languished for months due to abundant global supplies, a robust U.S. dollar and stiff competition among exporters.
While the report avoided piling on more bearish news, it didn’t provide much positive momentum for low crop prices that have pressured profits for farmers, seed companies and tractor makers, said Dan Cekander, president of market-research firm DC Analysis. The USDA in February projected U.S. farm incomes would fall to the lowest level since 2002 because of the continued slump in crop prices.
Agriculture-related shares including Monsanto Co. , Archer Daniels Midland Co. and Deere & Co. traded lower after the report, though fertilizer makers CF Industries Holdings Inc. and Mosaic Co. both held on to earlier gains.
Without any signal for grain and oilseed prices to move higher, traders now would turn their attention to North American weather as the chief influence on the market, Mr. Cekander said. Some analysts have predicted a warmer-than-usual summer. Others have said that even a U.S. drought like the one in 2012 wouldn’t materially diminish the global oversupply of grains.
Corn futures mostly remained lower after the USDA maintained its forecast for domestic supplies of the grain. The department estimated inventories at 1.837 billion bushels in August, unchanged from its February projection. Analysts had expected the agency to raise its forecast for corn reserves to 1.860 billion bushels.
Globally, the USDA forecast corn stockpiles for the 2015-16 season at 207 million metric tons, down from the 208.8 million it projected last month.
CBOT May corn futures slipped one cent, or 0.3%, to $3.59 1/2 a bushel. Lightly traded March futures added 1/4 cent, or 0.1%, to $3.59 a bushel, the highest settlement price since Feb. 24.
Wheat prices gained to a three-week high after the USDA report showed smaller-than-expected U.S. and global stockpiles.
The USDA pegged domestic inventories of wheat on May 31, the end of the season for that commodity, at 966 million bushels, the same as its February estimate. Analysts expected a forecast of 975 million bushels.
The agency estimated world wheat stockpiles for the 2015-16 season at 237.6 million metric tons, down from last month’s estimate of 238.9 million tons. Analysts had projected 238.1 million tons. Lower estimates for world wheat supplies are the result of reduced production forecasts for India and Australia, the USDA said.
CBOT May wheat futures added 3 cents, or 0.6%, to $4.68 1/4 a bushel. Front-month futures added 2 1/2 cents, or 0.5%, to $4.63 3/4 a bushel, the highest closing price since Feb. 17.
The USDA maintained its projection for Brazil’s corn and soybean production, pegging the country’s soybean output at 100 million metric tons and its corn output at 84 million tons, unchanged from last month.
Government forecasters also left untouched their forecasts for Argentina’s crop production. The USDA said growers there likely will produce 58.5 million tons of soybeans and 27 million tons of corn, the same as the agency’s February forecast.
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