Global Soybean Reserves At 16-Year Low Thanks To S. American Drought
Global reserves of soybeans are shrinking the most in 16 years as demand for food, feed and fuel rises, creating the biggest-ever exports for U.S. farmers. Inventories at the start of the next season on October 1 will be 20 percent lower than a year earlier, Jefferies Bache LLC predicts. According to Bloomberg News, prices that rose 8.7 percent since December 30 will gain another 6.7 percent to $14 a bushel by June. China signed deals in the week ended February 17 to buy 13.4 million metric tons from the U.S., about what its own farmers grow in a year. The U.S. Department of Agriculture anticipates record global exports in 2012.
Meanwhile, U.S. production may increase more than forecast as higher prices discourage growers from switching to corn. While farmers can still make about $128 an acre more from corn, that compares with $215 in November. The November soybean contract, reflecting anticipated prices after the U.S. harvest, now costs 2.3 times more than December corn futures, up from a ratio of 1.99 in November.
Drought in South America, where farmers are harvesting this month, caused irreversible crop damage and will reduce global production by 7.2 percent, Hamburg-based research company Oil World said in a report. The Rosario Cereals Exchange cut its forecast of Argentina's crop on Feb. 23 by 10 percent from its January estimate.