Three years of bumper crops collided with the Sino-U.S. trade war to create the largest U.S. soybean stockpile ever, a price-depressing 1 billion bushels at the start of this month. But by next Sept. 1, the so-called carry-over will be just two-thirds of its current size, estimated the USDA on Thursday. The astonishing turnaround would be the result of high demand for soybeans and the smallest crop in six years.
Still, farm-gate prices would remain at a 13-year low, said USDA analysts in the monthly WASDE report. The soybean stockpile would be a fat 640 million bushels, the second highest on record and twice as big as usual.
U.S. corn production is taking a hit, although not as much as soybeans, from the rainiest spring in a quarter-century. The corn crop will be down 4 percent from 2018, while the soybean crop would be 19 percent smaller, said the USDA in its monthly Crop Production report. The cold and wet spring delayed planting by weeks. Late-planted crops yield fewer bushels per acre, and there is concern in the Farm Belt that an early frost will bring additional losses.
Corn and soybeans, the two most widely grown U.S. crops, were planted on nearly 167 million acres this year. They are the foundation of the food supply because they are fed to the cattle, hogs, and poultry that provide meat, milk, and eggs to consumers as well as being ingredients in many foods. Corn and soy are also used as feedstocks for biofuels.
The USDA estimates of the crops — 13.8 billion bushels of corn and 3.6 billion bushels of soybeans — were 1 percent smaller than forecast in August due to lower projected yields. Its estimate of the soybean carryover next fall was 3 percent smaller than expected by traders in Chicago.
In a potential upturn, Chinese importers have received permission to buy up to 5 million tonnes, or 184 million bushels, of U.S. soybeans free of the 30 percent trade war tariff they would normally pay, said AgriCensus. The news service cited “several market sources” as saying the companies were seeking bids on soybeans for loading on ships in the Pacific Northwest. Reuters said that more than 600,000 tonnes were purchased by privately run Chinese companies, “the country’s most significant purchases since at least June.”
Soybean futures prices surged by 29 cents a bushel at the Chicago Board of Trade, to $8.95-3/4 on Thursday. The rally in soybeans raised corn and wheat prices as well.
China and the United States are expected to hold ministerial-level trade talks in early October in Washington. Both nations took conciliatory steps on trade on Tuesday.