Soybean stocks are lower than they have been since 1977, but not as low as many analysts expected.
That finding by the United States Department of Agriculture on June 30 helped knock down soybean and canola futures prices last week.
Analysts say oilseed markets are in a bearish mood, and even another USDA report issued the same day that reported fewer soybean acres than expected wasn’t enough to save the market from a significant fall after the grain stocks numbers were released.
The USDA found 410 million bushels of soybeans in the U.S. on June 1, which was 10 million bu. more than most analysts had anticipated.
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Old-crop canola fell along with soybean prices, although the Canadian and American markets were out of step because of the Canada Day and Independence Day holidays.
Ag Commodity Research analyst Nolita Clyde said more bad news is likely to come for new-crop canola prices, which she thinks are overvalued compared to soybeans.
New-crop canola is now priced about $30 US per tonne higher than soybeans, a big jump from the previous week’s premium of $14 per tonne.
The situation is reversed for old-crop canola, which is now trading at a huge discount of about $60 per tonne, a further plunge from the previous week’s $48 discount.
With Statistics Canada and private trade estimating a big increase in canola production this year, the new-crop premium is unlikely to hold.
“The new-crop price spread is simply too high,” said an Ag Commodity Research report.
Once traders accept that there is more canola out there, they will begin to sell it, pulling futures prices lower.
USDA reported U.S. wheat acreage will decline by about four percent from last year.
But bearish world wheat production numbers were also released by the International Grains Council last week.
The council expects 602 million tonnes of wheat to be produced around the world, rather than the 599 million in its previous outlook. That would be a new record, but the council is also predicting world wheat usage will outstrip production by one million tonnes, leaving wheat stocks low by historical standards.
The council also bumped up its coarse grain production number by four million tonnes, but increased coarse grains use by the same amount, leaving its expected stocks unchanged.
