Soybean Farmers See Rally Ending on Record U.S. Harvest
As soybean usage levels off and production increases, a significant shift to oversupply is expected. Soybean production in the U.S., the world’s biggest producer is expected to increase 10% this year to a record 3.631 billion bushels and inventories pre-2015 harvest are expected to be double what they were a year earlier according to a Bloomberg survey of 25 analysts. The oversupply could cause a price drop of 15% to $10.50 per bushel easing feed costs for livestock producers who are ramping up production in response to higher prices for animal protein. Soybean acreage for 2014 increased as corn prices fell and demand for soy-based animal feed, especially from Chinese hog producers increased. U.S. soybean inventories on September 1st are forecast to be 127 million bushels or 3.8% of domestic use and exports – the lowest level since pre-1965. Before the 2015 harvest, U.S. stockpiles are expected to soar to 319 million bushels. However there are still months until harvest and dry weather can still affect output. Paris-based Societe Generale SA stated in its June 4th report that the U.S. government is overly optimistic regarding output and demand will prevail. Global stockpiles for August 31, 2015 are expected to be a record 81.98 million tons – up from 66.79 million tons this year, giving the U.S. the margin of losing 200 million bushels of production without tightening world supply.
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