Prices for soybeans that had been skyrocketing are losing more steam in the latest USDA grain stocks report.
The primary reason is the early sharp drop in demand for U.S. soybeans from other countries noticeably driving up supplies, said Jim Mintert, an agricultural economist at Purdue University.
Mintert said the record yields still forecast by USDA for soybeans this year are also a contributing factor in driving up estimated supplies.
His remarks were made last Thursday during a webinar originating from the West Lafayette campus in response to USDA's monthly World Agricultural Supply and Demand Estimates report for October.
USDA is now projecting ending stocks for U.S. soybeans at 320 million bushels.
That's up considerably from the 120 million bushels of soybeans contained in the USDA ending stocks forecast from the spring.
Mintert said the amount of soybeans projected to be carried over into the 2022 marketing year by USDA has been rising gradually since May, but the latest ending stocks forecast was probably the biggest surprise in the most recent WASDE report.
"It was much, much larger than really anybody was expecting," he said.
USDA predicts ending stocks for soybeans based on a percentage of usage at 7.3 percent compared to 4.2 percent a month ago.
Mintert said it's unusual for such a large jump in the ending stocks forecast to occur in such a short period of time.
A major factor is the early commitments by other countries to purchase U.S. soybeans for the upcoming marketing year is down 37 percent from this time last year, he said.
Mintert said early commitments from China alone to import U.S. soybeans is down 44 percent from a year ago.
The silver lining in the USDA report is the projected supply of soybeans, despite the major one-month bump in the forecast, is "still reasonably tight," he said.
Mintert said that means soybean prices compared to their historical average are still very good but farmers are going to have to pay close attention to costs to help offset the impact of rising inflation.
USDA predicts the marketing year average for the price of soybeans at $12.35 per bushel, or $1.35 less than what USDA forecast in August.
"Soft exports on the soybean side are really starting to weigh this expanding market along with those supply estimates," Mintert said.
The latest WASDE report predicts near-record yields in the U.S. for corn despite a small drop in the amount per acre harvested from the previous month's forecast.
"That still gives us the second largest crop in history," Mintert said.
Record corn yields are projected in Indiana, Michigan and other states like Illinois, Ohio, Iowa and Nebraska.
USDA also increased its projection for exports of corn by 25 million bushels to 2.5 billion bushels.
Mintert said early commitments to purchase U.S. corn from other countries were also up slightly from a year ago at this time.
He said early commitments from China were 100 million bushels of corn above the same point last year.
There was also no change in the amount of corn used to make ethanol from the September forecast.
Mintert speculated the making of corn-based fuel will be higher judging by the strong comeback in ethanol plant margins impacted dramatically early in the pandemic.
"You have to wonder if maybe we might see more ethanol production and more corn used for ethanol more than USDA is projecting. Those ethanol margins look really strong," he said.
A 15-cent-per-bushel price drop in corn from the September report was also projected by USDA.
Mintert said a contributing factor was projected ending stocks for corn rising from 8.5 percent in August to just above 10 percent currently.
"That kind of explains, I think, some of the weakness we've seen in corn prices over the past couple of months," he said.