Soybean bulls got a surprise boost after a key report forecast a smaller-than-expected United States harvest.
Production, still pegged to be the second biggest ever, was lowered from last month’s estimate, which signaled a record large crop. The cut stemmed from yields in big growing states like Iowa that ended up less robust than anticipated, according to the US Department of Agriculture’s (USDA) November supply-and-demand report, or WASDE.
“Everything was exactly the opposite of what the trade was expecting,” said Jack Scoville, vice president of Price Futures Group Inc. in Chicago.
Soybean futures broke a four-day losing streak in Chicago to rise the most in almost three weeks to $12.12 a bushel.
America’s soybean export outlook was trimmed as well amid sluggish sales to China. The slow pace has farmers nervous as they plan for next year’s crop. Surging fertilizer prices could lead to a bumper soy harvest next year as producers may shift away from more chemically reliant corn.
In the nearer term, plantings in No. 1 grower Brazil are ahead of schedule. The South American nation should crowd out US exporters early next year as beans become ready to ship. That means the USDA may need to further reduce its US export forecast.
“Those still might be too high,” Don Roose, president of US Commodities, said in an interview.
In general, soybean crops have been resilient, weathering everything from drought to floods in the US, the second biggest global producer.
Weather woes have helped drive crop prices to near-decade highs this year. That’s contributed to increasing food inflation. Soy supplies are a key factor in whether costs will continue to climb as the beans are used as feed for animals raised for meat.
A United Nations index tracking staples from grains to vegetable oils climbed 3 percent to a fresh decade high in October, threatening even higher grocery bills for households that have already been strained by the pandemic.
In other crops, the outlook for US corn production was raised amid increased use in making ethanol as fuel demand surges. The corn harvest is still on track to be the second biggest on record, according to the latest USDA estimate. Corn ended the trading day in Chicago up, snapping five sessions of losses.
For wheat, the USDA ratcheted up its global trade figure to 203.2 million tons, an all-time high.
Wheat futures in the US and Europe all rose on Tuesday.
Wheat soared last week, with futures in Paris hitting a record and those in the US jumping to the highest levels in a decade or more. Weather woes in key growing areas have led to a shortage of grains, driving up prices of wheat used in baked goods and livestock feed.
Global wheat exports will reach an all-time high as Russia, the European Union, India and Ukraine are all shipping out more than expected.
That’s according to the USDA’s monthly crop report out Tuesday, which showed that exports will reach 203.2 million metric tons.
The battle for what country holds the wheat-export crown remains a close race: The USDA upped its estimate for Russia by 1 million tons due to a bigger harvest, but the EU is still poised to take the lead for now.
The US is falling in the wheat export ranks, though: It’s sales will be surpassed not only by the EU and Russia, but also Ukraine and Australia. That’s largely due to high domestic prices for varieties like spring wheat, the USDA says.