MercoPress. South Atlantic News Agency

Brazil and Argentina crop problems raise demand for US supplies

USDA trimmed its 2015/16 Brazil corn harvest outlook by 3.5mmetric tons to 77.50m metric tons and its Brazil soy harvest outlook by 2m metric tons to 97m tons

Domestic supplies of corn and soybeans will be tighter than expected in the United States as problems with crops in Brazil and Argentina have raised demand for U.S. supplies from overseas buyers, the U.S. Agriculture Department. In its latest monthly supply and demand report, the government cut its new-crop and old-crop ending stocks outlooks for both corn and soybeans by more than analysts had forecast.

 Corn and soybean futures surged shortly after the report was released, with the most-active soy contract peaking at US$12.08-1/2 a bushel, its highest since June 30, 2014, before retreating to pre-report levels. Investors quickly dialed in increases to U.S. soy plantings in the coming months, expecting farmers to cash in on the price rally.

For corn, USDA said U.S. ending stocks for 2015/16 would be 1.708 billion bushels, down from its May outlook for 1.803 billion bushels. It lowered its 2016/17 corn end stocks view to 2.008 billion bushels from 2.153 billion bushels.

Old-crop soybean stocks were cut to 370 million bushels from 400 million bushels. New-crop soy stocks were lowered to 260 million bushels from 305 million bushels.

USDA trimmed its 2015/16 Brazil corn harvest outlook by 3.5 million metric tons to 77.50 million metric tons and its Brazil soy harvest outlook by 2 million metric tons to 97 million metric tons, reflecting dryness in key growing areas. The cuts outstripped forecasts.

It left its estimate of Argentine 2015/16 crops unchanged, at 27 million metric tons for corn and 56.5 million metric tons for soybeans, but said that harvest delays there have helped boost U.S. exports.

Wheat supplies are expected to rise to a 29-year high even as the corn and soybean balance sheet tightens.

USDA pegged 2016/17 U.S. wheat ending stocks at 1.050 billion, up from its May outlook of 1.029 billion bushels, due to a record winter wheat yield of 50.5 bushels per acre. The U.S. government raised its winter wheat production forecast to 1.507 billion bushels, with bigger harvests expected in states such as Kansas, Oklahoma and Texas.

Old-crop wheat ending stocks were raised to 980 million bushels from 978 million.