USDA monthly outlook reported that soybean crops are expected to reach a record high harvest in six years, thus lowering the price in CBOT. Two other U.S. major crops, corn and wheat also estimated to produce higher than expected result.
According to Bloomberg, based on USDA report, soybean production is expected to achieve a record high as well as corn output. Corn is estimated to reach higher than analysts' expected harvest. The federal agency also mention that world inventories of soybean will rise 13%. As a result, soybean price touched a six-year low. Bloomberg also reported that soybean futures for January delivery fell 1.2 percent to close at $8.555 a bushel. While corn futures for December delivery fell 2.1 percent to $3.59, and wheat futures for December delivery fell 2.2 percent to $4.9075. Dale Durchholz, senior market senior market analyst at AgriVisor LLC in Bloomington, IL said regarding the price drop, "We are stuck with big reserves and prices will work lower to stimulate new demand".
U.S. is the world's largest producer of soybean and corn, and the third largest producer of wheat in the world. Soybean is used as a main ingredient in many products, from meal, oil to shampoo. Around 85 percent of soybean production is processed into soybean meal and soybean oil. As for corn, besides its function as staple food in some world's region, it is also made into plastic, fabrics, and bio-fuel. That makes both soybeans and corn as the most valuable agricultural export of United States.
However, according to Nasdaq, soon after USDA issued its forecast, corn and soybean prices also inched higher after notching a two-month and six-week low. Some analysts told Nasdaq that although a price is lower but a weaker U.S. dollar also shored up prices for the crops in Chicago Board of Trade (CBOT). Nasdaq also noticed a slight increase of 0.8 percent of wheat and corn futures, and 0.2 percent of soybean futures in Wednesday trading.
The exact data from USDA outlook was quoted by AgWeb, that expected number of U.S production is to reach 3,981 million bushels. This is due to the increase of yield to 48.3 bushels per acre, that will increase 2 percent of soybean supplies. While U.S. production number is increased, product reduction occurred in India, South Africa, and Uruguay. Inconsistent rainfall during growing season, followed by late-season heat have resulted a below-average yields for third consecutive year in India.
Every month, USDA issued World Agricultural Supply and Demand Estimates (WASDE) consist of supply and demand outlook for major crops in the world and United States. This month's issue, published on Tuesday, showed a higher than expected production of three major crops in U.S.
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