Soybeans Head for Worst Losing Streak in 10 Months on Outlook for Supply

Soybeans fell, heading for the worst losing streak in 10 months, on forecasts for bigger stockpiles of the world’s most-used oilseed, easing food inflation that sparked riots across North Africa and the Middle East.

Global inventories will reach 59.32 million metric tons on Oct. 1, 1.9 percent more than previously forecast, the U.S. Department of Agriculture will say today, according to the average estimate in a Bloomberg survey of 13 analysts. When the USDA cut its forecast by 0.1 percent last month, soybeans futures jumped to their highest price since July 2008.

The decline in soybeans is helping to ease a surge in agricultural prices the United Nations says sent global food costs to a record last month, sparking protests across North Africa and the Middle East. The acceleration in food inflation drove 44 million more people into extreme poverty since June, the World Bank says. More crop supply also means lower feed costs for livestock producers including Tyson Foods Inc.

“The harvest is happening now and the crop is just excellent, adding quantity to each growing field,” said Jonathan Bouchet, an analyst at OTCex Group, a commodity broker and adviser in Geneva. “We should definitely see soybeans correcting further in the coming days.”

Soybean futures for May delivery fell 12.75 cents, or 1 percent, to $13.3625 a bushel at 6:22 a.m. local time on the Chicago Board of Trade. The contract fell 5.5 percent over four days, the longest losing streak since May. Prices touched a 30- month high of $14.5575 on Feb. 9.

Brazilian production is expected to grow to 70.3 million tons, up from a February forecast of 70.1 million tons and 68.7 million tons a year earlier, the Agriculture Ministry said today. Corn production is expected to drop to 55 million tons, down 1 million tons from last year, according to the ministry’s crop forecasting agency, known as Conab.

Improved Crops

Soybeans may fall as low as $11.50 in the next four months because of the prospect of improved crops in Brazil, Argentina and India, said Murali Krishna, chief executive officer of Hyderabad, India-based Transgraph Consulting Pvt. Ltd., which provides commodity risk management to companies including the India unit of Bunge Ltd. (BG) and Cadbury Plc.

Speculators are also anticipating lower prices, cutting their net-long position, or bets on higher prices, by 6.3 percent to 164,840 contracts in the week ended March 1, according to data from the U.S. Commodity Futures Trading Commission. That was a third consecutive weekly drop, and took the net-long position to its smallest since September.

Chinese Purchases

Soybeans climbed 40 percent in the past year on record Chinese purchases and reduced production of oilseed crops in Russia, Canada, the U.S. and parts of Europe. Rainfall in South America last month may have improved expectations for crops in Brazil, the biggest exporter after the U.S., according to Oil World, an oilseed forecaster based in Hamburg.

Inspections of the oilseeds for overseas delivery from ports in the U.S., the world’s biggest shipper, fell 46 percent to 26.4 million bushels in the week that ended on March 3 from the prior seven days, according to the government. That’s the lowest amount since September.

China imported 2.32 million metric tons of soybeans in February, a 55 percent decline from a month earlier, according to customs data posted today. That’s the smallest monthly amount since October 2008, the data show.

“The low February figure can be explained by the Chinese Lunar New Year festival, which is why some buying was brought forward,” Commerzbank AG (CBK) said in a report today.

Prospects Improved ‘Decisively’

South American soybean prospects improved “decisively” in February as rainfall improved crop conditions, Oil World said in a report March 1. Output in Brazil, Argentina, Paraguay, Bolivia and Uruguay will total 131.13 million tons, up 2.8 percent from a January estimate, Oil World said.

The USDA’s monthly crop report is due at 8:30 a.m. in Washington. It may also show an estimate for corn stockpiles of 121.81 million tons, compared with an earlier forecast of 122.51 million tons, according to the Bloomberg survey. Wheat inventories may be estimated at 177.56 million tons, from 177.77 million tons, the survey shows.

“The weather has been quite favorable in Argentina and Brazil,” Sudha Acharya, an analyst at Kotak Commodity Service Ltd., said by phone from Mumbai today. “We don’t see any major upside in prices.”

Tyson Foods Inc. (TSN) said on Feb. 4 that operating margins in the chicken unit may decline as grain costs rise $500 million in the current fiscal year. The company, which reported better- than-expected earnings on rising pork and chicken sales, said cost-cutting and higher prices will help ensure its poultry unit remains profitable. Shares yesterday gained 4.3 percent to $19.61.

Wheat futures fell 5.5 cents, or 0.7 percent, to $7.5325 a bushel and corn dropped 1.4 percent to $6.915 a bushel in Chicago.