Chicago | Reuters — U.S. soybean futures fell to the lowest levels in a year on Tuesday after the U.S. Department of Agriculture raised its estimates of South American crops and domestic soy ending stocks.
Corn futures closed modestly lower while wheat ended higher as traders covered short positions.
Chicago Board of Trade May soybean futures settled down 2-1/2 cents at $9.39-1/4 per bushel, paring losses after dipping to $9.29-3/4, the lowest spot price on a continuous chart since April 2016 (all figures US$).
CBOT May corn ended down 1/2 cent at $3.66-1/2 a bushel while May wheat rose 4-1/2 cents to $4.33-1/4 a bushel.
Soybeans extended early declines after USDA raised its forecast of global soybean stocks at the end of the 2016-17 marketing year to 87.41 million tonnes, from 82.82 million in March and well above an average of trade estimates for 83.91 million.
The figure reflected rising crop estimates of South America’s soy harvest. The USDA pegged Brazil’s crop at 111 million tonnes, up from 108 million last month. Earlier on Tuesday, Brazil’s agricultural statistics agency Conab raised its estimate of the soy crop to 110.2 million tonnes, from 107.6 million in March.
“They pumped up Brazil and Argentina soy production a little higher than what the USDA was expected to do,” said Jack Scoville, analyst with the Price Futures Group.
“These are huge numbers. We’re kind of figuring out that prices are still a little high,” Scoville said.
Corn futures were also pressured by rising estimates of South America’s corn output.
On the domestic front, some traders were disappointed that USDA left its forecast of U.S. 2016-17 corn exports unchanged at 2.225 billion bushels.
“The USDA didn’t change any of the (U.S.) export numbers, which is stupid. We’re running way ahead of normal on corn exports and way ahead on bean exports,” said Roy Huckabay of Linn + Associates, a Chicago brokerage.
Wheat futures fell immediately after USDA’s report, but rallied to close higher. Funds hold a large net short position in CBOT wheat futures, leaving the market vulnerable to bouts of short-covering.
Wheat’s rebound came despite USDA raising its forecasts for U.S. and global wheat inventories at the end of the 2016-17 marketing year. The government raised its forecast of domestic wheat ending stocks to 1.159 billion bushels, a near 30-year high.
— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Michael Hogan in Hamburg and Colin Packham in Sydney.