Soybeans Advance as China’s Imports Deplete Global Inventories

April 22 (Bloomberg) -- Soybean prices rose for the second straight day as a jump in Chinese oilseed demand erodes global inventories already forecast to fall to a five-year low.

U.S. exporters reported sales of 180,000 metric tons to China for delivery before Aug. 31, the U.S. Department of Agriculture said yesterday. The agency confirmed on April 20 sales of 110,000 tons to China. Inventories in the U.S., the world’s largest grower and exporter, will also fall to the lowest since 2004, the government said on April 9.

“China’s appetite for soybeans has been much stronger than most people expected,” said Greg Grow, the director of agribusiness for Archer Financial Services in Chicago. “Prices will have to rise to slow down demand, or carryover supplies will be exceptionally tight” before U.S. farmers begin harvesting this year’s crop in September, Grow said.

Soybean futures for July delivery rose 6 cents, or 0.6 percent, to $10.39 a bushel on the Chicago Board of Trade. Yesterday, the price climbed 2.1 percent. The most-active contract has gained 9.1 percent this month.

World inventories on Sept. 30 will fall to 45.8 million tons, down from 49.95 million forecast in March and 53.1 million tons a year earlier, the USDA said on April 9.

Sales to China

U.S. export sales to China since Sept. 1 have jumped 36 percent from a year earlier. A drought has slashed output in Brazil and Argentina, the two biggest exporters after the U.S. The Buenos Aires Cereal Exchange today lowered its forecast for this year’s soybean harvest by 2.2 percent to 36.2 million metric tons from a week-ago projection because of continued dry weather and lower harvested yields.

The USDA estimated domestic stockpiles on Aug. 31, before the next U.S. harvest, will drop to 165 million bushels, down 20 percent from a year earlier.

China’s economy will expand faster than forecast this year and next as the government’s 4 trillion-yuan ($586 billion) stimulus package spurs domestic demand and boosts investment, Goldman Sachs Group Inc. said today in a report.

China will extend a plan to stockpile 6 million tons of soybeans by two months and buy more rapeseed from growers to help farmers sell crops and boost incomes, the State Council said on its Web site.

The government said it will hand out 3 billion yuan ($439 million) to improve hog- and dairy-farming facilities, extend a program that provides subsidized loans to dairy farmers until Dec. 31, and prevent hog prices from sliding further.

“There are more people forecasting U.S. carryover will fall to 120 million bushels, based on the pace of export sales,” Grow said. “China’s economy is still growing, and their demand for meat” is driving consumption of animal feed made from soybeans, he said.

Soybeans are the second-biggest U.S. crop, valued in 2008 at a record $27.4 billion, government figures show. Corn is the biggest at $47.4 billion.