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U.S. soy demand seen falling after price jump

Demand for U.S. soybeans is falling as bumper crops in South America eat into U.S. export prospects, the U.S. government said on Tuesday.

The large harvests in Brazil and Argentina also will cause U.S. processors to cut back on their expected pace of soy crushing as overseas buyers look for alternative suppliers to meet their soymeal needs, the U.S. Agriculture Department said on Tuesday.

The bearish demand view pushed soybean futures to session lows, with the most-active contract Sv1 trading down 4.3% around midday. Lower crop prices could help ease food costs that have been fueling inflation.

“The negative-ism is coming from the fact that USDA is cutting demand back,” said Jack Scoville, analyst with The Price Group.

USDA lowered its outlook for soybean exports by 65 million bushels and its outlook for domestic crush by 10 million bushels in its monthly World Agricultural Supply and Demand Estimates report.

Those moves, combined with a cut to acreage made in June after farmers seeded less soy acres than planned in March, led to a 2022/23 soybean harvest forecast of 4.505 million bushels and an ending stocks view of 230 million bushels. Analysts had been expecting stocks of 211 million and production of 4.532 billion.

Soybean futures had rallied to near record-highs in June as Russia’s invasion of Ukraine upended global shipping flows. But the surging prices sparked concerns about demand, particularly as fears about a global recession grew, and futures have since plunged back toward the same level they were trading at a year ago.

USDA also raised its forecast for domestic corn production after factoring in the June acreage outlook that showed farmers were able to seed more of the grain they had planned in the spring despite rainy weather that delayed plantings.

Corn production was pegged at 14.505 billion bushels, 45 million bushels higher than USDA’s previous outlook.
Source: Reuters (Additional reporting by Karl Plume; editing by David Evans)

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