U.S. grains: Soybean futures hit 2018 highs as supplies tighten

USDA cuts domestic soy ending stocks; traders expect more demand from China

CBOT November 2020 soybeans with Bollinger (20,2) bands. (Barchart)

Chicago | Reuters — Chicago Board of Trade soybean futures surged to their highest prices since March 2018 after the U.S. Department of Agriculture on Friday said inventories will dwindle to a five-year low.

Corn futures advanced to a one-year high, while wheat futures slumped in a setback from a five-year high reached on Thursday.

Traders are keeping a close eye on crop supplies following an uptick in demand from China, the world’s top soybean importer.

In a monthly report, USDA cut its forecast for domestic soybean ending stocks by 37 per cent to 290 million bushels. That was below analysts’ expectations for 369 million.

USDA increased its estimate for U.S. soybean exports by 3.5 per cent from September to 2.2 billion bushels.

“The bean ending stocks at 290 billion bushels are implying a whole lot of use,” said Jack Scoville, vice president for Price Futures Group in Chicago. “Since we’ve sold record amounts to the Chinese already, USDA must be figuring that it’s going to continue for a while longer.”

Most-active CBOT soybeans ended up 15-1/2 cents at $10.65-1/2 a bushel and touched their highest price since March 2, 2018 (all figures US$).

CBOT wheat slipped 1-1/2 cents to $5.93-3/4 a bushel. Corn rose eight cents to $3.95 a bushel and touched its highest price since Oct. 15, 2019.

USDA lowered its estimate for domestic corn production by 1.2 per cent to 14.722 billion bushels, while soybean production declined one per cent to 4.268 billion bushels.

With U.S. soy supplies tightening, traders are increasingly turning their attention toward rival producer Brazil, where dryness has threatened plantings. Traders are also monitoring dryness that has hampered wheat plantings in the Black Sea region.

Dry weather may reduce Russia’s winter wheat sowing area by 10-15 per cent, according to consultancy Sovecon.

“The focus now shifts to weather in South America and Russia to see if crops there can help ease some of the world cushion,” said Don Roose, president of Iowa broker U.S. Commodities.

— Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Karl Plume in Chicago, Gus Trompiz in Paris and Colin Packham in Sydney.

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