Soybean’s Best Rally Since 2012 Seen Over on Record Crop

The soybean bears are back.

As prices head for the biggest quarterly gain in more than two years, an expanding global glut is raising concern that the rally is coming to an end. Traders surveyed by Bloomberg News are the most bearish in nine years, with three-quarters of respondents expecting a decline next week.

Soybean futures have rebounded about 15 percent since reaching a four-year low in October as demand grew for U.S. exports. Now, Brazil’s government is forecasting domestic farmers will gather the biggest crop ever early next year, easing supply tightness. Rising world production will push global inventories to an all-time high, the U.S. Department of Agriculture said this week.

“The bearishness is a long-term macro view of the supply,” Gregg Hunt, a broker at Archer Financial Services Inc. in Chicago, said in a telephone interview. “The market is clashing right now with near-term demand.”

Fifteen of 20 analysts surveyed by Bloomberg News said soybeans will fall next week, the most since September 2005. Only two respondents were bullish and three were neutral.

Soybean futures for January delivery slid 0.6 percent to $10.3575 a bushel at 10:02 a.m. on the Chicago Board of Trade. Prices touched $9.04 on Oct. 1, the lowest since July 2010.

Food Prices

Bigger global grain and oilseed supplies have pushed world food costs to a four-year low as declines in commodity prices help keep a lid on inflation. Soybeans are heading for second straight annual loss, the longest slide since 1999.

The USDA predicted this week that global stockpiles before next year’s harvest will increase 35 percent from 12 months earlier, reaching 89.87 million metric tons by the end of the season.

“It’s not surprising that so many people are bearish,” said Brian Grete, the editor of the Pro Farmer newsletter in Cedar Falls, Iowa. “When they want to be bullish, they talk about the demand side of things. When they want to be bearish, they talk about the supply.”

Corn and wheat fell in tandem with soybeans earlier this year amid prospects of record global production of grain. Corn traders surveyed by Bloomberg were bearish for a fourth week, with 10 out of 19 analysts expecting prices to decline. Twelve of 18 wheat traders predicted losses, the most pessimistic reading in five weeks.

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