Chicago | Reuters — China bought more U.S. soybeans on Monday as the U.S. Department of Agriculture reported crop stockpiles were smaller than traders expected, sending futures prices to nine-week highs.
Corn futures set an eight-week high after the USDA report also showed tighter-than-expected inventories of the yellow grain.
Farmers welcomed the rallies after crop prices plunged last month when the federal agency estimated that this autumn’s harvests would be larger than many projected. Growers have struggled due to low prices, the U.S.-China trade war and historic springtime flooding, which caused unprecedented delays in corn plantings.
China, the world’s largest soybean importer, has slashed U.S. imports during the trade dispute. Chinese buyers have recently made a string of purchases, though, including up to 600,000 tonnes on Monday, according to traders.
“We’re seeing China business every day,” said Ted Seifried, chief market strategist for Zaner Ag Hedge in Chicago.
Most actively traded soybean futures ended up 2.4 per cent at $9.06 a bushel at the Chicago Board of Trade. The most-active corn contract surged 4.2 per cent to $3.88 a bushel. Most-active wheat futures were up 1.7 per cent at $4.95-3/4 a bushel.
USDA estimated U.S. soybean supplies as of Sept. 1 at 913 million bushels, below the average estimate for 982 million. Soy stocks, however, were up 108 per cent from the same point last year, due largely to the drop in U.S. exports to China.
The agency cut its estimate for the 2018 soybean crop by 2.6 per cent to 4.428 billion bushels, which contributed to stockpiles being smaller than expected. That was the largest-ever revision to the soybean crop in any September USDA quarterly stocks report, said Bill Lapp, president of consultancy Advanced Economic Solutions.
Corn stocks were 2.114 billion bushels, USDA said, below projections for 2.428 billion and down one per cent from a year ago. Wheat stocks were slightly above expectations at 2.385 billion bushels.
“We were surprised that USDA didn’t make an adjustment in U.S. corn production for 2018 because stocks came in much below expectations,” said Terry Reilly, senior analyst for Futures International in Chicago.
The United States still has ample supplies in storage, traders said. The outcome of the U.S.-China trade war and the size of the autumn harvests also remain uncertain.
USDA separately said 11 per cent of U.S. corn and seven per cent of soybeans were harvested, below normal for this time of year.
“We’re sitting on a lot of soybeans out there, and it’s going to take a long time to work through this stockpile,” Reilly said.
— Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Nigel Hunt in London and Colin Packham in Sydney.