Crop prices dropped after the latest forecasts from the U.S. government showed soybean production will rise to a record and corn output will be more than analysts expected.
U.S. soybean output in the 12 months that began Sept. 1 will be 3.981 billion bushels, up from last year’s record harvest of 3.927 billion, the U.S. Department of Agriculture said Tuesday in a report. That will push reserves by the end of the season to 465 million bushels, exceeding the average of estimates compiled by Bloomberg and the agency’s own forecast made last month.
The price of soybeans, used in everything from animal feed to shampoo, touched a six-year low after the report. They’re heading for a third annual decline amid bumper crops in the U.S. and Brazil, the two biggest producers. The Brazilian government boosted its own crop forecast to a record earlier on Tuesday.
Larger crops may reduce livestock-feed costs for meat producers including Tyson Foods Inc. and Smithfield Foods Inc. A glut of commodities including soybeans will cut world food-import costs to a five-year low, the United Nations affirmed Thursday.
For corn, the USDA raised its estimate for domestic output to 13.654 billion bushels, exceeding the 13.564 billion average estimate. Reserves will rise to 1.76 billion bushels by Aug. 31 from 1.731 billion this year. The average estimate by analysts was for 1.597 billion. In October, the agency forecast just 1.561 billion.
The agency also said world inventories will rise 13 percent, to a record 211.91 metric tons on reduced feed use in China.
“We are stuck with big reserves and prices will work lower to stimulate new demand,” said Dale Durchholz, senior market analyst at AgriVisor LLC in Bloomington, Illinois.
On the Chicago Board of Trade, soybean futures for January delivery fell 1.2 percent to close at $8.555 a bushel. Corn futures for December delivery fell 2.1 percent, to $3.59 a bushel. Wheat futures for December delivery fell 2.2 percent, to $4.9075 a bushel, after the USDA also raised its domestic inventories estimate for the commodity.