(Agrimoney) – US stocks of the oilseed fell in 2013-14 even further than had been thought – in fact, falling to by far their tightest on record – but the prospect of a bumper harvest this year stymied a rise in futures prices.
Soybean inventories in the top producing country were, as of September 1, just 92.0m bushels (2.50m tonnes), the US Department of Agriculture said in its quarterly stocks reported, viewed by grain investors as a particularly important briefing.
The figure was 36m bushels below expectations, and the lowest in 41 years.
Taking demand into account, today’s figure implies a stocks-to-use ratio of less than 3% – by far the lowest reading on data going back 50 years.
‘Is it a game changer?’
Typically, a low stocks-to-use ratio implies higher prices, as buyers are forced to compete harder for supplies.
However, a revival in soybean futures proved short-lived, with the November contract standing 0.5% lower at $9.18 ½ a bushel with a little under an hour’s trading in Chicago to go.
Investors pointed to the rebuild in supplies from a newly started harvest expected to show a record yield, from a record area.
“Is [today’s report] a game changer? We would say ‘no’,” said Don Roose, president of Iowa-based broker US Commodities.
‘Head-scratcher’
Nonetheless, the stocks figure looked like taking off the agenda some of the more upbeat estimates for the revival this season in inventories, which some commentators have seen recovering to some 600m bushels.
If soybean sowings this year also prove to have been overestimated, as many investors believe, “if the yield does not turn out as big as people think, carryout stocks are not going to be as big as people are talking about,” Mr Roose told Agrimoney.com.
The lower-than-expected stocks figure has also created a puzzle, over where the extra soybean supplies went, with usage of the oilseed closely observed through export and crush data, unlike for grains, whose use in livestock feed goes largely unmonitored.
“The number for soybeans should be in the can. It’s a head-scratcher, where those bushels have gone,” Mr Roose said.
Grain supplies
Conversely, the USDA estimate for domestic corn inventories as of the close of 2013-14 was, at 12.4bn bushels (31.4m tonnes), up 50% year on year and a little higher than investors had expected.
Wheat inventories as of September 1 were pegged at 1.91bn bushels, also a little above market expectations, while the USDA in a separate report nudged higher by 7m bushels to 2.04bn bushels its forecast for this year’s harvest, a figure in line with investor forecasts.
Wheat futures for December stood 1.5% lower at $4.74 ¼ a bushel in Chicago, with a little under an hour’s trading to go.
December corn was 1.2% lower at $3.22 a bushel, earlier touching a fresh five-year low for a spot contract of $3.19 ½ a bushel.
The USDA also raised by 69m bushels to 3.358bn bushels its estimate for the US soybean harvest last year, a revision which had been expected by analysts.
