Washington | Reuters — The United States and the world will be awash in soybeans in 2014-15, the U.S. Department of Agriculture said on Friday, in a report that also gave its first survey-based readout of the struggling winter wheat crop.
Following the report, Chicago wheat futures fell about 1.5 per cent despite a lower-than-expected U.S. crop forecast, while soybeans jumped almost 1.8 per cent higher and corn fell 1.3 per cent after USDA pointed to a big crop on the way, despite a slow start to spring planting.
On the back of a projected record-large crop, U.S. soybean stocks will more than double to 330 million bushels in 2014-15 from a lowered 130 million in the current marketing year.
Domestic supplies will remain razor-thin, though, until harvest starts in September. USDA raised its forecast of U.S. soybean imports to 90 million bushels to help plug the gap for the next few months.
But 2014-15 looks like a different story as world soybean production approaches 300 million tonnes, up from 284 million in 2013-14, driving global stocks up sharply as well.
U.S. soybean prices at the farm gate were forecast to fall to $10.75 per bushel in the new year from $13.10 in 2013-14, and well below current new-crop futures at $12.27 (all figures US$).
The U.S. corn market is projected to see ample but not overly burdensome supplies in the new year, in part because 2013-14 stocks continue to shrink.
USDA slashed old-crop corn stocks to 1.146 billion bu. from 1.331 billion in April, continuing a string of reductions dating back to December. For 2014-15, ending stocks were forecast at 1.726 billion bushels, above expectations.
The corn stocks-to-use ratio for 2013-14 is now just 8.4 per cent. In general, the lower the ratio, the higher potential for price increases, but traders said prices are already high.
“If we were trading at the $4 range for corn we would have probably seen a spike in the market with a 1.14-billion-bu. of old-crop carryout. But due to the fact that we’re trading above $5, a rally would be more questionable,” said Karl Setzer of MaxYield Co-op.
USDA estimated the 2014-15 season-average farm price for U.S. corn at $4.20/bu., down from $4.65 in 2013-14. New-crop corn futures were trading near $5 on Friday.
This year’s U.S. corn crop is off to a rocky start, with plantings hampered by a cold, wet spring and planting and emergence lagging well behind the five-year average.
Slump in soft red winter wheat crop
U.S. winter wheat production for 2014 will be down nine per cent from a year ago, at 1.4 billion bu. The all-wheat crop of 1.963 billion compares with a trade estimate of 2.046 billion and is down eight per cent on the year.
“Most of the decline year to year in winter wheat reflects lower area and yields for soft red winter (SRW) wheat,” said USDA.
Production of SRW wheat, the variety traded in Chicago futures, will plummet by 21 per cent while hard red winter wheat output is estimated to rise slightly on the year. [Related story]
In a surprise, USDA raised its 2013-14 world corn stocks forecast by some 10 million tonnes from a month ago, to 168.42 million tonnes, and stocks for the 2014-15 season will be higher still, at 181.73 million tonnes.
China is forecast to import only three million tonnes of corn in 2014-15, down from 4.5 million in the current year.
But its appetite for soybeans is voracious, with imports projected at 72 million tonnes for 2014-15, up from 69 million in the current year.
China will account for a remarkable two-thirds of total global soybean imports in the new year, with demand from other major buyers such as Japan and Europe little changed.
Crisis-hit Ukraine’s corn, or maize, crop was forecast at 26 million tonnes, down from almost 31 million in 2013-14.
— Ros Krasny is a commodities correspondent for Reuters in Washington, D.C.