Soybeans, Corn Plunge as USDA Sees Biggest Inventories

Soybean futures fell the most in three months and corn extended the longest slump since December after the U.S. government forecasts bigger global inventories of both crops than analysts expected.

Soybean inventories on Oct. 1 will reach 60.12 million metric tons, more than the 59.46 million estimated in January and 8.8 percent larger than a year earlier, the U.S. Department of Agriculture said today in a report. Corn reserves will be 118.04 million tons, up from 115.99 million predicted last month. Analysts expected soybean reserves to drop to 59.07 million tons and corn at 115.57 million.

Larger inventories may reduce feed costs for pork producer Smithfield Foods Inc. and poultry processor Sanderson Farms Inc. and make grain cheaper for ethanol producers including Archer-Daniels-Midland Co. and Poet LLC, after the worst drought since the 1930s cut production last year and sent corn and soybean prices to record highs.

“There is no shortage of soybeans,” Dale Durchholz, the senior market analyst at AgriVisor LLC in Bloomington, Illinois, said in a telephone interview. “The world food pantry has dodged a bullet, but it requires a good growing season, and that means more rain in the U.S.”

Soybean futures for March delivery tumbled 2.3 percent to close at $14.525 a bushel at 2 p.m. on the Chicago Board of Trade, the biggest drop for a most-active contract since Nov. 12. The oilseed decline 1.5 percent this week, snapping a four-week rally.

Corn futures for March delivery fell 0.2 percent to $7.09 bushel in Chicago, after earlier touching $7.0675, the lowest since Jan. 11. Prices fell for a sixth straight session, the longest slump since Dec. 13. The grain fell 3.7 percent this week.

More Rain

Prices accelerated losses at midday on forecasts for rain in dry regions of Argentina and southern Brazil next week that will improve the conditions for big crops, said Richard Feltes, the vice president of R.J. O’Brien & Associates in Chicago. February and March are the key months for South American crops as soybeans develop pods and fill them with beans and corn fills kernels with sugars and starch.

Combined soybean production in Brazil and Argentina will rise 28 percent to a record 136.5 million, with corn output gaining 5.9 percent to 99.5 million, the USDA said.

Shipping and harvest delays in Brazil may force importers to buy more from the U.S., and an extension of Argentina’s drought may limit final yields, Rabobank said today in a report.

In Brazil, excess rain in Mato Grosso, the biggest soy-growing state, disrupted inland crop deliveries and may extend the wait time to 50 days for ships to load exports, Hamburg-based researcher Oil World said Feb. 5.

Today there were 106 ships loading or waiting to load soybeans, animal feed or cooking oil, up from 85 a week earlier and another 35 ships waiting to load corn at the five major Brazilian ports, according to SA Commodities in Santos, Brazil. A year earlier, 66 were waiting.

“Any logistical issues with exports or further downgrades to Argentina’s crop will prove bullish for prices as it will cause higher demand for U.S. soybeans,” Luke Chandler, global head of agricultural research at Rabobank, said in a report today.

Corn is the biggest crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.

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