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Soybean Prices Jump to 26-Month High on U.S. Inventory Forecast

Nov. 9 (Bloomberg) -- Soybean prices rose to a 26-month high after a government report showed increasing demand for shrinking supplies from the U.S., the world’s biggest grower and exporter.

Inventories before next year’s harvest will be 30 percent less than forecast last month, the Department of Agriculture said today. The crop will total a record 3.375 billion bushels, down from 3.408 billion projected in October. The average estimate of 34 analysts surveyed by Bloomberg News was for 3.426 billion bushels. Futures jumped by the exchange limit in Chicago.

“The cut in the soybean crop was a surprise and reduces inventories to a bare minimum,” said Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis. “Demand is growing faster than global production.”

Soybean futures for January delivery rose 54.25 cents, or 4.3 percent, to close at $13.29 a bushel at 1:15 p.m. on the Chicago Board of Trade. That marked the biggest gain since Oct. 8, when the USDA last made its monthly forecast. Earlier, the price rose by the CBOT limit of 70 cents to $13.4475, the highest level since Aug. 28, 2008.

U.S. inventories will be 185 million bushels on Aug. 31, down from 265 million forecast in October, the government said. The estimate was slashed for the third straight month. Analysts expected 239 million bushels. Supplies at the start of this year’s harvest were 151 million.

A smaller surplus means higher feed costs for livestock producers including Tyson Foods Inc. and Smithfield Foods Inc. Profit margins may shrink at oilseed processors including Archer Daniels Midland Co. and Bunge Ltd.

U.S. exports will reach a record 1.57 billion bushels, up from 1.52 billion projected in October, the USDA said.

The U.S. soybean crop was valued at $31.8 billion last year, second only to corn at $48.6 billion, government figures show.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.

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