Soybean prices will average $14.75 a bushel in the second quarter, higher than projected last month, as prospects decline for crops in South America, Rabobank International said in a report.
The forecast, up from a March estimate of $14 a bushel, would be a record for quarterly average prices, Rabobank analysts including Erin Fitzpatrick and Nick Higgins said today in an e-mailed report. Soybeans may average $14 a bushel in the third quarter and $13.50 a bushel in the fourth, up from March projections of $13.25 a bushel and $12.50 a bushel, respectively, the bank said.
Argentina, which has suffered from drought and frost this year, may harvest 43 million metric tons of soybeans, 2 million less than previously estimated, Rabobank said. Brazil’s crop may be 65.3 million tons, compared with a March forecast of 66.5 million. Last year, the two countries harvested 49 million tons and 75 million tons of soybeans, U.S. Department of Agriculture data show.
“South America’s production is now likely to show the largest year-over-year decline on record,” Rabobank said. “Higher prices are needed to encourage U.S. farmers to increase soybean plantings for the 2012-2013 marketing year.”
Rabobank’s estimates are below the USDA’s projection for Argentina at 45 million tons, and its forecast for Brazil of 66 million. China, the world’s biggest buyer of soybeans, may import 1.5 million tons more than the 55 million projected by the USDA, the bank said.
Rabobank said corn may average $6.45 a bushel in the second quarter while Chicago wheat may be $6.30 a bushel, unchanged from last month’s forecasts. The bank raised its forecast for milling wheat traded on NYSE Liffe in Paris to 195 euros ($258.39) per ton, compared with 175 euros last month, because of production risks in Europe, where crops suffered from dry weather and a cold spell in February.
Rising corn exports may cut U.S. inventories to 636 million bushels by the end of the crop year Aug. 31, 165 million bushels less than the USDA’s projection of 801 million bushels, Rabobank said. The bank also increased its estimate for U.S. corn planting to 94.3 million acres, up from 94 million projected previously.