USDA Forecasts Larger-Than-Expected Soybean Stocks -- Update
Soybean prices fell to their lowest point in nearly a decade, after a report forecast that Chinese tariffs will cut into exports and push up stocks of one of America's most widely grown crops.
The U.S. Department of Agriculture on Thursday projected stocks of soybeans for the 2018-19 crop year at a would-be record of 580 million bushels, around 50% higher than its previous estimate and more than analysts expected.
Soybean prices slid after the report. July-dated contracts touched $8.26 a bushel at the Chicago Board of Trade, trading at the lowest point since December 2008. The report was "bearish" for soybean prices, said Terry Reilly, a senior analyst at Futures International.
Analysts say many U.S. farmers, who this year planted more soybeans than corn for the first time in 35 years, will struggle to turn a profit at such low prices.
US Wheat Supply Little Changed as Competition Heats Up -- Market Talk
13:15 ET - USDA reports that domestic wheat supplies are little changed amid traders' concern regarding competition with other producing countries. The agency says that wheat stockpiles in 2018-19 are due to rise to 985M bushels from its previous estimate of 946M bushels in June, while world stockpile estimates are forecasted to fall to 260.9M metric tons from June's 266.2M metric tons. Analysts say traders are concerned that the US could lose export sales of wheat to cheaper offerings from competitors like Russia. (firstname.lastname@example.org; @francescamarief)
Trade-Rattled Farmers Clamp Down on Soybean Sales -- Market Talk
13:03 ET - US farmers are throttling back on selling their soybean crop from last year, according to Cargill, as futures prices tumble due to trade fears. Marcel Smits, Cargill's CEO, says in an interview that while US farmers typically have sold a majority of their prior-year crop to commodity companies like Cargill by this time, their sales volume currently is "down significantly because farmers are holding back their stocks." That could mean more financial hardship for farmers, as they wait for soybean prices to revive before selling crops to raise cash. It also poses a challenge for grain companies like Cargill, Archer Daniels Midland and Bunge, which require a steady stream of crops to process and trade. (email@example.com; @jacobbunge)
STORIES OF INTEREST:
Cargill: Trade Uncertainty Could Affect Investment -- Market Talk
13:18 ET - So far, tariffs and threats among the US and major trading partners like China, Mexico and the EU have mainly forced agricultural giant Cargill to step nimbly as it moves cargoes of crops around the world, says CFO Marcel Smits--Chinese soybean crushers cancelling orders for US beans and instead buying from South America to sidestep duties, for instance. But if the tariffs remain or expand, Smits says the uncertainty could force Cargill to delay investments or more fundamentally alter its operations. "If [the trade disputes] aren't resolved, it'll lead to serious consequences for economic growth," he says in an interview. (firstname.lastname@example.org; @jacobbunge)
Ag Export Sales Lag Behind Expectations -- Market Talk
09:16 ET - Sales of grain, soybeans and red meat mostly lagged expectations in the most recent week. The USDA says that exporters sold 136,400 metric tons of wheat in the week ended July 5, well below the range of pre-report estimates. The sales were "dismal," says Terry Reilly of Futures International. Corn sales also fell short, while soybeans were at the low end of estimates. China last week introduced tariffs on a range of US agricultural goods, which is expected to weigh on exports -- particularly for soybeans. Meat exports also suffered. Sales of pork, which both China and Mexico targeted with tariffs, fell 43% from the prior four-week average. Beef sales fell 8% from the same period. (email@example.com; @b_parkyn)
Cattle, Hog Futures Rise; Producers Ramp Up Output -- Market Talk
15:51 ET - Livestock futures rise, steadying after a week of mostly lower closes. In a monthly supply-and-demand report, the USDA forecast higher production of red meat and poultry in 2018 and 2019. Concern about oversupply has recently pressured those markets, as traders brace for larger herds. Recent data showed that hog farmers intend to raise more pigs in the months to come, for example. But the agency raised its beef export forecast, a sign of strong demand, and left pork trade unchanged despite new Chinese and Mexican tariffs on US imports. CME July lean hog futures rose 0.2% to 79.95 cents a pound. August live cattle contracts climbed 1.1% to $1.05025 a pound. (firstname.lastname@example.org; @b_parkyn)