Chicago | Reuters — U.S. soybean futures surged more than five per cent to their highest level in 18 months on Tuesday after the U.S. Department of Agriculture forecast that domestic stocks would fall more than most analysts expect by the end of the 2016-17 marketing year.
Corn and wheat futures followed soybeans higher, although the USDA’s outlook for wheat was bearish.
At the Chicago Board of Trade, most-active July soybean futures settled up 57-1/2 cents at $10.84 per bushel (all figures US$). The spot May contract, which is in delivery, reached $10.82, the highest spot price on a continuous chart since November 2014.
CBOT July corn ended up 12 cents at $3.81 per bushel and July wheat finished up 4-3/4 cents at $4.61-1/4 a bushel.
Several soybean contracts briefly rose the 65-cent daily limit, and four CBOT soymeal contracts settled up their daily limit of $20 per short ton and set life-of-contract highs.
After Tuesday’s close, the CBOT expanded its daily trading limits for soymeal, soybean and soyoil futures for Wednesday’s trading session.
The market surged after the USDA, in its first supply/demand forecasts for the 2016/17 marketing year, projected U.S. soybean ending stocks at 305 million bushels, below an average of trade estimates for 405 million.
“The new-crop beans number is the one that stands out the most. Coming out 100 million bushels below the average trade guess is a big miss, no matter how you slice it,” said Jim Gerlach, president of A/C Trading.
The USDA attributed its figure to rising export demand for U.S. soy and reduced stocks in South America this fall following floods in Argentina.
CBOT corn followed soybeans higher. The USDA projected U.S. corn stocks would rise to 2.153 billion bushels by the end of 2016-17. The figure was below the average trade forecast of 2.294 billion, but would be the largest since the 1980s if realized.
“Yes, new-crop carry-out came in about 140 billion bushels below the average trade guess. But it’s almost 2.2 billion bushels, and you can’t call that bullish,” Gerlach said.
U.S. farmers are in the thick of spring planting and had seeded 64 per cent of the 2016-17 corn crop and 23 percent of the soybean crop by Sunday, the USDA said.
The strength in CBOT soy and corn futures dragged wheat higher, even though the USDA projected another year of record world wheat inventories. The government forecast global wheat ending stocks for 2016-17 at a record-high 257.3 million tonnes, a figure that topped all trade expectations.
“The world wheat numbers are just large,” said Don Roose, president of U.S. Commodities.
— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Gus Trompiz in Paris.