USDA Expected to Forecast Ongoing Grain, Soybean Surplus

Traders are bracing for pressure on grain and soybean futures as large production and stockpiles continue into next year.

Analysts surveyed by the Wall Street Journal expect the U.S. Department of Agriculture to show a surplus of grain and oilseed extending into the 2017-2018 crop year in its monthly supply-and-demand report.

The report, released on Wednesday at noon ET, is the first to forecast the next year's crop numbers, even though U.S. corn and soybean crops are still being planted.

"The assumption is that there's going to be plentiful cropsize," said Dave Marshall, a farm-marketing adviser at First Choice Commodities in Nashville, Ill, adding that weather could still change everything. "It will take Mother Nature to be able to reduce that supply."

U.S. soybean stockpiles at the end of the 2017-2018 crop year are expected to increase to 572 million bushels from an estimated 439 million in 2016-2017, according to average analyst estimates. Strong export demand for American soybeans is unlikely to offset increased acreage for the coming season, analysts forecast, even though U.S. production estimates are slightly lower due to last year's above-average yields.

Cutbacks to grain acreage and production in the U.S. won't be enough to significantly offset gluts of corn and wheat, analysts say. Corn carryover at the end of the 2017-2018 year is expected at 2.111 billion bushels, down from 2.327 billion in 2016-2017. The USDA will likely show wheat stocks declining to 974 million bushels from 1,162 million bushels.

Global corn and soybean stockpiles are expected to increase slightly in the 2016-2017 year, with enormous crops coming out of South America. But analysts expect the USDA to forecast those stocks easing in the next crop year, with strengthening demand out of countries like China expected to help swallow the extra supply.

Meanwhile, the USDA is expected to leave its April estimates for South America's 2016-2017 harvests largely unchanged. Analysts see the agency slightly increasing its forecast for Brazil's corn and soybean harvests, which are already at record levels.

Write to Benjamin Parkin at benjamin.parkin@wsj.com

(END) Dow Jones Newswires

May 09, 2017 17:10 ET (21:10 GMT)