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Commodities Corner: Soybean prices on track to post highest finish in over 8 years

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Soybean futures rose sharply on Wednesday, poised to register their highest settlement since September 2012, buoyed by expectations that supplies of the commodity will remain tight next year.

The U.S. Department of Agriculture forecast U.S. soybean ending stocks for the 2021/2022 marketing year at 140 million bushels, up 20 million from the 2020/2021 forecast, according to the monthly World Agricultural Supply and Demand Estimates report released Wednesday.

Despite the expected increase, “the report confirms the very tight ending inventories for soybeans through next year,” said Sal Gilbertie, president and chief investment officer at Teucrium Trading.  “Soybean ending inventories are too small for comfort,” and the USDA confirmed that the situation “will not change even with this season’s new crop.”

In Wednesday dealings, July soybeans
SN21,
+2.01%

S00,
+2.01%

rose 44 cents, or 2.8%, to $16.60 ¼ a bushel in Chicago, with prices based on the most-active contract on track to settle at their highest since September 19, 2012, according to Dow Jones Market Data.

In terms of “carry-out days” of excess supplies, U.S. soybean ending stocks, which is the amount left over at the end of a marketing year, was at 48.5 days for the 2019/2020 marketing year, said Gilbertie. The forecast for 2020/2021 is just 9.6 days worth of excess supplies, and for 2021/2022 it’s now at 11.6 days – and “that’s assuming good weather,” he said.

Corn and wheat futures, meanwhile, moved lower Wednesday. July corn
CN21,
-0.76%

fell 3 ¼ cents, or nearly 0.5%, to $7.19 a bushel. July wheat
WN21,
-1.18%

traded at $7.36 a bushel, up 5 3/4 cents, or 0.8%.

The USDA said that with total U.S. corn supply rising and corn use declining, 2021/2022 ending stocks are expected to be up by 250 million bushels from last year to 1.51 billion bushels.

The government agency also projects U.S. wheat ending stocks for the 2021/2022 marketing year at 774 million bushels, 11% lower than last year and the lowest in seven years.

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