Rabobank Sees U.S. Soybean Production at 2.8 Billion Bushels

U.S. soybean production may drop to 2.8 billion bushels or less, down 7 percent from a year earlier, as heat and drought persist in the Midwest, Rabobank International said.

U.S. soybean yields may average 38 bushels an acre, analyst Erin FitzPatrick said today in an e-mailed report. The Department of Agriculture, which will update crop forecasts on Aug. 10, said last month the domestic harvest may total 3.05 billion bushels with yields of 40.5 bushels an acre.

Soybeans surged 15 percent last month, touching a record $16.915 a bushel on July 23, amid the worst U.S. drought since 1956. Fifty-five percent of the crop has reached the pod-setting stage, meaning “we are in the midst of the critical yield-determining phase of the crop,” according to FitzPatrick.

“The U.S. drought continues to intensify, which is likely to cause soybean supplies to fall below current market expectations and push prices higher,” she said. “The window of opportunity for an improvement in conditions to prevent further yield loss is rapidly coming to an end.”

$20 a Bushel?

The oilseed may “easily” climb above $20 a bushel in the second half, according to FitzPatrick. Futures for November delivery traded at $16.175 on the Chicago Board of Trade by 5:18 p.m. London time.

Global soybean trade has reached “an unsustainable pace” after drought last year in South America reduced world supplies, the analyst said. Brazil and Argentina, the largest global exporters after the U.S., may have less than 10 million metric tons of soybeans available to ship before their next harvest in seven months, she said.

Soybean production in Brazil and Argentina may climb 30 percent in the next season to a combined 135 million tons as farmers boost acres to capitalize on higher prices, FitzPatrick said. Both countries may plant record amounts of the oilseed, which costs 65 percent less to grow than corn and is free from export quotas, according to the report.