(Bloomberg) – Soybean prices fell to a five-month low on Thursday after the U.S. government said that world supplies will be bigger than estimated in March.
The outlook for global inventories was increased for a second month, data from the U.S. Department of Agriculture showed. Record crops in Argentina and Brazil, the top growers after the U.S., are adding to supply as Midwest farmers are set to plant the most acres with the oilseed ever this spring.
Bigger grain and oilseed supplies have pushed world food costs to the lowest level since June 2010 as declines in commodity prices help to keep a lid on inflation. Soybean futures in Chicago tumbled 35 percent in the past 12 months, helping to trim expenses for meat producers who use the crop in livestock feed, such as Tyson Foods Inc.
“Supplies are still adequate-to-burdensome, especially compared with the last several years,” Don Roose, the president of U.S. Commodities in West Des Moines, Iowa, said in a telephone interview. “The U.S. is not competitive with cheaper South America supplies in the world market, and that is keeping the market on the defensive.”
Soybeans for May delivery were little changed at $9.53 a bushel on the Chicago Board of Trade at 10:38 a.m. in Singapore on Friday. Prices dropped 1.9 percent to close at $9.535 a bushel on Thursday, capping the biggest loss since Jan. 12, after dropping to $9.5025, the lowest since October.
The gains for supplies were limited as the agency said that U.S. inventories will be smaller than forecast last month. Still, the USDA increased its outlook for production in Argentina.
Bigger Reserves
Global reserves before this year’s harvest in the Northern Hemisphere will total 89.55 million metric tons, the USDA. That compares with 89.53 million forecast in March. Analysts surveyed by Bloomberg expected 89.57 million, on average.
Corn and wheat prices also fell after the USDA’s report. The agency said world corn reserves will rise 10 percent from a year earlier to 188.46 million tons. That’s up 1.7 percent from last month’s forecast and the largest since 2000.
World wheat inventories will rise 5.7 percent from 2014 to 197.2 million tons.
“There’s a lot of wheat in the world, there’s no question on that,” Jacquie Voeks, senior market adviser at Stewart-Peterson Group in Mahomet, Illinois, said in a telephone interview. “We have to be very cautious.”
Corn for May delivery in Chicago rose 0.3 percent to $3.79 a bushel on Friday, after retreating 0.3 percent on Thursday. Wheat for delivery in July advanced 0.2 percent to $5.185 a bushel today after a 1.2 percent slump on April 9.
