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Goldman Lifts Soybean Price Outlook as USDA Downgrades U.S. Crop

Sept. 13 (Bloomberg) -- Goldman Sachs Group Inc. raised its outlook for U.S. soybean prices in the next three and six months after a government report yesterday showed U.S. production will be reduced due to dry weather.

Soybeans may be $12.50 a bushel in three months and $11.50 in six months, below current price levels while above the bank’s previous outlook of $10.50 a bushel, Goldman analysts including Damien Courvalin wrote in an e-mailed report today. The U.S. Department of Agriculture lowered its forecast for the U.S. harvest to 3.149 billion bushels yesterday, its second cut in as many months and 3.3 percent less than expected in August.

“Uncertainty over the size of the U.S. corn and especially soybean crops remain unusually high for this time of year given the volatility and extremes in planting and growing weather across the Midwest,” Courvalin wrote. The USDA may lower its outlook for U.S. yields again in its October report, he said.

Soybeans for November delivery rallied 2.8 percent yesterday on the Chicago Board of Trade, before falling as much as 0.7 percent today to $13.8675 a bushel. The most-active contract has jumped 20 percent since reaching a 19-month low in August as heat and dry weather intensified in U.S. growing areas.

Areas of the Midwest, including top growers Iowa and Illinois, had as little as 5 percent of the normal amount of rain in the last 30 days, according to the National Weather Service. Crop development was already delayed by wet, cool weather earlier this year, leaving yields vulnerable to heat and dry weather in August, a time when plants are developing pods and maturing before the harvest, USDA data show.

Production

Soybean prices may still be pressured by ample world supplies, Courvalin said. Global production may be 281.66 million metric tons, less than expected in August while still the biggest crop on record, the USDA estimated.

“While we see upside risk to current prices given downside risks to U.S. production, we ultimately believe that lower U.S. exports and another large increase in South American soybean acreage and production will leave U.S. inventories above last year’s level and prices below the current forward curve,” Courvalin said.

Corn prices may be $4.25 a bushel in the next three, six and 12 months, Courvalin said. The bank left its wheat forecast unchanged at $6.50 a bushel.

To contact the reporter on this story: Whitney McFerron in London at wmcferron1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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