WASHINGTON (Reuters) – U.S. soybean supplies were forecast to rise to the highest ever as a trade war with China, the world’s largest buyer of the oilseed, will cut into exports, the U.S. Agriculture Department said on Thursday.
USDA, in its monthly supply and demand report, pegged soybean ending stocks for the 2018/19 crop year at 580 million bushels, up from its estimate of 385 million bushels issued a month ago before China imposed tariffs on imports of U.S. soybeans.
If realized, that would surpass the previous record of 574 million bushels of soybeans left over at the end of the 2006/07 crop year.
Analysts’ estimates in a Reuters survey had pegged 2018/19 soybean ending stocks in a range from 390 million bushels to 571 million bushels.
The government cut its export projections for soybeans by 250 million bushels to 2.040 billion bushels.
“They kind of ripped the Band-Aid off,” said Ted Seifried, analyst with Zaner Ag Hedge. “That is an aggressive move from the USDA.”
It was the second biggest monthly cut to soybean exports. In August 2012, USDA cut its soybean export forecast by 260 million bushels as a drought lowered production potential.
USDA also lowered its end stocks outlook for the 2017/18 crop year, which ends on Aug. 31, to 465 million bushels from 505 million bushels, due to increases in demand by crushers and higher exports in the current marketing year.
USDA also raised its outlook for the 2018/19 soybean harvest to 4.310 billion bushels, up 30 million bushels from its previous outlook. It left its yield forecast unchanged at 48.5 bushels per acre.
For corn, USDA pegged the 2018/19 harvest at 14.230 billion bushels, in line with analysts’ estimates, and up from the 14.040 billion bushels it predicted in June. It left the corn yield outlook unchanged at 174.0 bushels per acre.
USDA pegged 2018/19 domestic corn ending stocks at 1.552 billion bushels, near the low end of market forecasts and down from its June projection of 1.577 billion bushels. It boosted its corn export outlook by 125 million bushels to 2.225 billion bushels but lowered the forecast for ethanol use.
It cut its 2017/18 corn ending stocks view to 2.027 billion bushels, below the low end of market forecasts, also due to increased export demand.
Corn futures <0#C:>, which had traded in negative territory for much of the morning, turned higher after the report was released.
Additional reporting by Tom Polansek in Chicago; Editing by Andrea Ricci and Rosalba O’Brien