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Dry weather and shipping delays in South America are boosting demand for soybeans from the U.S., the world’s largest grower and exporter, and producing the tightest inventories in almost five decades.
Stockpiles will shrink to a nine-year low of 130 million bushels on Aug. 31, before the next U.S. harvest, according to the average of 31 analyst estimates in a Bloomberg survey. Reserves will total 4.2 percent of demand, the lowest since 1965, U.S. Department of Agriculture data show. The USDA will update its estimates tomorrow.
The drop in supplies will help send Chicago futures up 8.4 percent to an average $16.16 a bushel through August, Morgan Stanley said in a Feb. 4 report. Prices have climbed 10 percent from a six-month low on Jan. 11 as drought dimmed prospects for the crop in Argentina and rain left delivery backlogs at Brazilian ports. The countries are the largest shippers after the U.S., where export sales are up 27 percent from a year earlier, driven by demand from China, the biggest buyer.
“The U.S. does not have the supply to sell more soybeans overseas,” said Dan Cekander, the director of grain-market analysis at Newedge in Chicago, who predicted a rally to $16.50. “Price rationing will have to occur. It may take six months before world supplies are more balanced with demand.”