Soybean futures soared the most in more than a year after a closely watched US crop report signaled shockingly tight supplies.
US reserves of the oilseed at the end of the season will only amount to 200 million bushels, brought down by lower yields and output, according to the US Department of Agriculture’s latest supply-and-demand estimates for crops worldwide. That compares to expectations of 246 million in a Bloomberg survey of analysts.
Crop sizes are being scrutinized because of their role in the future price of food. Inflation has ripped across the globe, and world food prices have recently touched records. Soybeans are crushed to make cooking oil, are fed to animals raised for meat, and are also used in alternative fuels.
According to the current estimate, use of soybeans will exceed production for the third crop season in a row, said Jake Hanley, senior portfolio strategist at Teucrium Trading.
“Beans stole the show today,” he said. “Production failing to keep pace with demand is supportive for prices.”
Chicago soybeans for November rose as much as 5.4% to $14.8875 a bushel in Chicago. That’s the biggest gain since Jun. 30, 2021.
Uncertainty over crops out of the war-torn Black Sea, intensified drought and worries about a prolonged global economic slump are all putting a spotlight on harvests and plantings across the globe.
Adding to perceptions that there will be less soy to go around, US exports, which have been in question for some time, are cut to 2.085 billion bushels from last month’s estimate of 2.155 billion bushels.
Meanwhile, the global wheat crop is getting bigger. The US raised world production by about 4 million tons, mainly due to bigger Russian and Ukrainian crops. Corn exports were also increased, now standing at about 13 million tons for the 2022-23 season. That shows the progress being made under the Ukraine grain-export corridor, as corn has accounted for about half of the crop tonnage that’s flowed so far.
The war is still taking a significant toll, however, as Ukraine shipped double that amount the prior season.
Corn for December delivery in Chicago increased much as 2.1% to $6.995 a bushel. Benchmark wheat for December remained lower after the report.
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