Chicago | Reuters — U.S. grain futures slumped on Friday after the U.S. Department of Agriculture said farmers and crop handlers had more supplies in storage than analysts expected.
The bigger-than-expected inventories from previous harvests add to an oversupply as U.S. farmers are starting to bring in another massive corn and soybean crop from their fields.
Supplies have increased as a trade row between Washington and Beijing has slowed U.S. exports of soybeans to China, the world’s top importer of the oilseed. Last week, soybean futures neared a 10-year low on worries over the hardening dispute.
“We’re just piling more beans on top of more beans,” said Ted Seifried, chief agricultural market strategist for Zaner Group in Chicago.
The USDA in a quarterly report said soybean stocks were 438 million bushels as of Sept. 1, exceeding analysts’ estimates by nine per cent.
Corn stocks were 2.14 billion bushels, which was six per cent above the average analyst estimate, and wheat stocks of 2.8 billion bushels were 1.5 per cent above expectations.
Inventories of corn swelled as livestock producers used less of the grain than expected for feed, said Don Roose, president of Iowa-based broker U.S. Commodities.
USDA also increased its estimate for last year’s U.S. soybean harvest by 0.4 per cent to 4.411 billion bushels. Analysts on average were expecting the agency to trim its estimate.
“We’ve got more grain than we thought around,” Roose said. “It’s a pile-on effect in the soybeans.”
The front-month Chicago Board of Trade corn futures contract slid 2.3 per cent to $3.56-1/4 a bushel (all figures US$). The nearby contract earlier reached $3.66-3/4, its highest price since Aug. 17.
CBOT wheat futures slipped 0.8 per cent, to $5.09 a bushel. Soybean futures dropped 1.1 per cent, to $8.45-1/2 a bushel.
Supplies could grow even bigger if farmers uncover bigger-than-expected corn and soybean yields during the harvest.
“The bean yields will now be front and centre, and the demand is still questionable,” said Brian Basting, analyst for Advance Trading in Illinois.
In a separate report, USDA boosted its estimate for the 2017-18 U.S. wheat crop by seven million bushels, to 1.884 billion bushels. Analysts, on average, had expected the government’s wheat harvest estimate to fall to 1.872 billion bushels.
“If you add the large stocks on top of bin-buster crops, we have a lot of agricultural commodities lying around,” said Terry Reilly, senior commodity analyst for Futures International in Chicago.
“This is going to be a storage problem this fall.”
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Gus Trompiz in Paris and Colin Packham in Sydney.