Soybean farmers will produce more than the world needs for the fourth consecutive year, compounding a record surplus that has more than doubled since 2009.
US farmers, the biggest producers and exporters, will finish planting the most acres ever during the next month, just as Brazil and Argentina wrap up a third record harvest. American producers shifted land away from corn, which is more expensive to grow, judging that soybeans will offer better returns even with prices down 34 per cent in the past year.
World inventories may rise 5.8 per cent to 95 million metric tons before the 2016 harvest, a Bloomberg survey of analysts showed. Less than three years after a US drought sent prices to an all-time high, a surge in production has outpaced record demand. Cheaper supplies of animal feed are a boon to hog producers in China, the top importer, and are boosting profit for processors including Archer-Daniels-Midland Co.
“It’s not difficult to imagine world inventories topping 100 million tons,” said Steve Nicholson, a vice president of food and agriculture research at Rabo AgriFinance Inc. in St. Louis.
Not everyone is bearish, partly because global demand has been a record for seven straight years. US export sales of soybeans for delivery by 1 September jumped 11 per cent from the same period a year earlier, while sales of soybean meal rose 13 per cent, both records for the date, USDA data show.
Improved demand from China has helped soybeans outperform corn and wheat this year, partly because US growers were reluctant sellers, said Bruce Weber, the director of soybean products and exports at Inver Grove Heights, Minnesota-based CHS Inc., the largest farmer-owned cooperative.
“Demand has been good, and it has taken longer to fill the pipeline than expected,” CHS’s Weber said. “Supplies don’t count until farmers sell.”
Bloomberg News, edited by ESM
