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Demand for US soybeans seen falling with strong South American yields

The U.S. Department of Agriculture 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. USDA also raised its forecast for domestic corn production.

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A field of soybeans seen growing in Grant County, Minnesota, on July 12, 2022.
Jeff Beach / Agweek
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WASHINGTON — Demand for U.S. soybeans is falling as bumper crops in South America eat into U.S. export prospects, the U.S. government said Tuesday, July 12.

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 Tuesday.

The bearish demand view pushed soybean futures to session lows, with the most-active contract 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.

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Those moves, combined with a cut to acreage made in June after farmers seeded fewer 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, based on an average yield of 177 bushels per acre.

Analysts had been expecting the report to show a corn harvest of 14.520 billion bushels and a soybean harvest of 4.532 billion bushels. The average market forecast for yields was 177.025 for corn and 51.5 for soybeans.

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