Grain, Soybean Futures Make 'Pity' Rally
Grain and soybean futures rebounded Wednesday after a government report projected ongoing oversupply.
The U.S. Department of Agriculture on Tuesday increased its domestic stock forecasts for soybeans and wheat in 2017-18, while cutting its domestic corn stocks projection. The agency raised its global stockpile forecasts for all three crops. Prices fell after the report.
Though the figures were largely in line with expectations, analysts said there was little in the supply-and-demand outlook to justify Wednesday's reversal.
"Grains in the green this morning but as part of what feels like a pity rebound from lows," said Arlan Suderman, chief commodities economist at INTL FCStone Inc., in a note to clients. "The government continues to reinforce a bearish domestic and global supply picture and it's tough to envision how that could change in the January [supply-and-demand] report."
Soybean futures for January rose 0.4% to $9.79 1/4 a bushel at the Chicago Board of Trade. March wheat contracts gained 1.5% to $4.16 3/4 a bushel while March corn futures climbed 0.4% to $3.49 a bushel.
In its Tuesday report the USDA raised this season's domestic soybean stockpile forecast to 445 million bushels and wheat stocks to 960 million. The higher stocks were a result of lower export projections, which the agency attributed to heightened global competition. The corn stock forecast of 2.437 billion bushels was lower due to higher ethanol demand.
One of the best prospects for lowering corn and soybean stocks, analysts said, is a weather issue in South America, which is due to start harvesting its crops early next year. Projections for the Brazilian crop are rising amid good growing conditions, but concerns about dryness in Argentina recently lent some support to prices.
Updated weather forecasts on Wednesday showed better chances of rain in Argentina in the next six to 10 days.
Write to Benjamin Parkin at benjamin.parkin@wsj.com
(END) Dow Jones Newswires
December 13, 2017 15:42 ET (20:42 GMT)