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Soybean Plunges As USDA Forecasts Lower Domestic Output

February 26, 2019 at 18:53 by Andrew Moran

Soybean futures are falling on Tuesday as the US government is forecasting lower domestic production in 2019 compared to the previous year. Reports that China is set to boost soybean crops and farm subsidies to limit dependence on US imports also did not help prices.

May soybean futures tumbled $0.105, or 1.14%, to $9.145 per bushel at 17:20 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybean prices have traded relatively sideways so far this year, shedding roughly 2% over the last month.

The US Department of Agriculture (USDA) released its annual agricultural outlook report, and it is projected that soybean production this year will be lower than in 2019. In total, soybean inventories in the 2019–2020 season are forecast to reach 5.105 billion bushels, exports are projected to be 2.025 billion bushels, and domestic consumption is estimated to be 2.105 billion.

According to the USDA, the soybean carryover on September 1, 2020 is expected to be 845 million bushels, down 7% from the previous year.

It said in its annual report:

The 2019–20 outlook for U.S. soybeans is for record supplies, higher crush and exports and lower ending stocks. Soybean exports for 2019–20 are projected at 2.03 billion bushels, up 150 million from the 2018–19 forecast. With rising global demand and reduced supplies in Brazil this fall, some recovery in U.S. exports is expected despite continued import duties assumed for U.S. soybeans in China.

Meanwhile, it is being reported by local outlets that Beijing is set to increase its soybean crop and expand farm subsidies as part of the nation’s efforts to reduce reliance on US products. The Ministry of Agriculture noted that it will expand the amount of land it utilizes to grow soybeans by approximately 330,000 hectares (815,000 acres) this year.

Agriculture Minister Han Changfu announced that it will boost subsidies to farmers in northern China and provide assistance to develop and promote more varieties of soybeans, helping the country move beyond animal feed. This past summer, the world’s second-largest economy launched a five-year plan to spur domestic production of soybeans.

This comes as the US government confirmed that China has already committed to purchasing an extra 10 million tonnes of soybeans.

In other agricultural commodities, May corn futures slipped $0.04, or 1.05%, to $3.76 a pound. May wheat futures fell $0.0475, or 1.00%, to $4.68 a bushel. May orange juice futures dipped $0.005, or 0.42%, to $1.19 a pound.

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