(Bloomberg) -- Soybean futures extended their decline to fresh 2020 lows with traders focusing on demand in the wake of the US Department of Agriculture’s surprise outlook for a record American harvest.
The USDA in its first estimate of US crops based in part on surveys from farmers Monday estimated the soybean harvest at 4.589 billion bushels — about 2.6% more than estimates in a Bloomberg survey of analysts. That’s as the USDA increased US soy planted acres by 1 million from its previous estimate. Fields were also boosted by ample rainfall and limited threatening heat.
“The crop report was scary bearish toward soybeans,” Archer Financial Services Inc. broker Dennis Smith said in a note. “Weather is near perfect for finishing the corn crop and for adding bushels to the soybean crop.”
Attention now was shifting to demand. USDA early Tuesday reported export sales of 132,000 metric tons of US soybeans to China, the top world importer, and 137,160 tons of US corn to Mexico.
Still, a major demand spike was in question. Pork producer WH Group said prices for pigs in China — where most soy-based animal feed is sent — could fall in the second half of the year amid weakening meat demand. That would hit China’s hog farmers and soy and corn growers in the US and Brazil.
As of last week, China’s purchases of US soybeans for the upcoming shipping season that begins Sept. 1 were about 85% lower from the previous year, according to USDA data.
--With assistance from Celia Bergin and Hallie Gu.
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