Chicago/Reuters – U.S. soybean futures fell to fresh five-month lows on Friday after federal crop forecasters said spring plantings would reach an all-time high above traders’ expectations.
Farmers in arid Plains states, the Midwest and south are shifting to plant soybeans, instead of corn and wheat, as the crop provides one of the few bright spots in a gloomy agricultural economy.
The U.S. Department of Agriculture (USDA) estimated they will increase soybean plantings by seven per cent from last year to 89.5 million acres, while reducing corn plantings by four per cent to 90 million acres. The agency issued the forecasts after surveying about 83,000 farmers about their plans.
“The switch away from corn was bigger than anyone figured,” said Jack Scoville, analyst for Price Futures Group in Chicago.
Most-active Chicago Board of Trade soybeans closed down 1.8 per cent at $9.46 a bushel after earlier touching $9.44-1/4, their lowest price since mid-October. For the quarter, the contract lost about 5.8 per cent, giving up all its gains from the last quarter of 2016.
Wheat and corn futures rose, recovering from recent multi-week lows, after the USDA said plantings would be slightly smaller than analysts expected.
Most-active CBOT wheat gained 1.3 per cent to $4.26-1/2 a bushel, while corn jumped 1.9 per cent to $3.64-1/4 a bushel. Wheat gained about 4.3 per cent in the quarter, and corn was up 3.5 per cent.
All the markets came under pressure from large supplies held in reserve, following recent bin-busting harvests. Low prices for crops have encouraged farmers to keep them in storage, rather than selling them to processors or livestock operations.
The USDA said soybeans in storage totalled nearly 1.74 billion bushels as of March 1, up 13 per cent from a year ago. Corn stocks were up 10 per cent at 8.62 billion, and wheat stocks were up 21 per cent at 1.66 billion.
Global supplies have also swelled, with South American countries harvesting bumper crops. Farm consultancy Agroconsult on Thursday raised its estimate for Brazil’s 2016-17 soybean crop to a record 113.3 million tonnes.
With surpluses in place, poor weather will need to disrupt U.S. spring plantings or crop development in the summer to spark strong gains in the futures markets, traders said.
The USDA data “still says we have too much grain,” said Don Roose, president of Iowa-based broker U.S. Commodities.
“Rallies are going to be hard-fought. We’re going to be quickly focusing on the weather to see if we can change any of these acreage numbers.”
– Additional reporting by Michael Hirtzer in Chicago, Naveen Thukral in Singapore and Gus Trompiz in Paris.