Soybeans fall amid ample supply forecast

Soybeans slipped further as optimism grows that global output might surpass the U.S. Department of Agricultures record estimate last month.

On the Chicago Mercantile Exchange, soybeans for July delivery traded at $15.2438 a bushel at 8:11 GMT, down 0.45% for the day.

Hiroyuki Kikukawa, general manager for research at Nihon Unicom Inc. said for Bloomberg: “Prices are declining because traders are expecting the USDA to raise its estimate on global production in its next report. That means increased competition among suppliers of both soybeans and corn.”

The USDA said in its weekly crop progress report that 57% of the nation’s crop was planted as of June 2. This is 13% higher than last week, but still significantly below the five-year average of 74%. As of June 2 2012, 93% of the soybeans crop was planted.

Nevertheless, Informa Economics Inc., a Memphis, Tennessee-based researcher reported yesterday that the global soybean output will exceed last months forecast of a 282.703 million metric tons and will reach 286.597 million in the year beginning September 1.

Elsewhere on the market, corn July futures slipped 0.12% during the session and traded at $6.5963 a bushel at 8:20 GMT. As with soybeans, corn global supply is expected to be at a record level, even though unfavorable weather conditions reduced areas sown to corn in the U.S.

According to the U.S. Department of Agriculture’s report this week, around 91% of the corn crop in the world’s largest grower has been planted, up from 86% the previous week. Planting was completed by that time last year. The USDA said on May 10 the U.S. will harvest a record 359.2 million tons this year even though the area sown to corn may 93.5 million acres, 3.9% less than forecast in March. That would still leave production 23% higher than last year’s reduced to drought crop, said Morgan Stanley on June 3.

Ilya Shestakov, Deputy Minister of Agriculture of the Russian Federation said Russia’s total grain harvest may surge to 95 million metric tons this season, significantly above the 70.9 million tons a year earlier.

Meanwhile, wheat futures for July delivery marked a 0.11% gain on the day. Wheat traded at $7.0138 a bushel at 8:19 GMT. Wheat advanced during the week as excessive rains in Midwest U.S. delayed planting of the spring crop and drought in Kansas and Texas caused winter yields decline.

According to USDA’s report on Monday, 73% of the winter wheat crop was planted as of the week ending June 2, compared to 60% in the preceding week, which shows a stable advance. However, this is still lower than the 80% five-year average and the 88% planted during the same week last year. Winter wheat condition is also worse than last year. The USDA reported 42% of the crop falls in the “very poor” and “poor” categories, 31% is “good” and “excellent” and 25 has a “fair” quality. Last year 18% was categorized as “very poor” and “poor”, 30% as “fair” and 52% was “good” and “excellent”.