U.S. Soy Supply Unlikely to Fall Further, Bunge Says (Update1)

May 18 (Bloomberg) -- U.S. soybean inventories, which the government says are heading to a five-year low, are unlikely to fall much further, according to Carl Hausmann, the chief executive officer of Bunge North America Inc.

Supplies on Aug. 31, before the next harvest, won’t be any lower than 100 million to 130 million bushels, Hausmann said today in an interview at the World Agricultural Forum in St. Louis. Bunge Ltd. is the world’s biggest oilseed processor.

“I don’t believe stocks can go below 100 million bushels,” Hausmann said. “If they look to be going lower, you will see an increase in price rather than a further decrease in carryout stocks.”

The soybean crop in the U.S., the world’s largest producer and exporter of the oilseed, will reach a record 3.195 billion bushels this year, up from 2.959 billion bushels in 2008, the Department of Agriculture said last week. Reserve inventories on Aug. 31 are projected at 130 million bushels. Rising production will boost stockpiles next year to 230 million bushels, the USDA said.

Falling Futures

Low supplies, and the higher costs for growing corn, which competes with soybeans for acreage, will prompt farmers to plant a record 76 million acres (30.8 million hectares) of the oilseed, the USDA said.

Increased production has helped drive futures down 30 percent from last year’s record. Still, Hausmann said a major weather disruption in the U.S., such as drought or flooding, combined with this year’s sparse South American rainfall, could push soybean prices back to 2008 levels.

“If we were to have a difficult growing season in North America this year, we could very easily be back to the high prices that we had last year,” said Hausmann, adding that he thought this was unlikely.

The World Agricultural Forum brings together executives from companies including Cargill Inc., the world’s largest agribusiness, Monsanto Co., Deere & Co. and others with agriculture ministers from developing world nations to discuss how to sustain global agricultural production.

Hausmann said Bunge needs to play a more vocal role in shaping agricultural development worldwide, balancing consumer needs with shareholder concerns.

“We need to engage in this societal debate to understand just what is our role,” he said. “We need to come up with a strategy that not only fits our shareholders interests in the short run, but must fit with society’s interests in the long run.”

White Plains, New York-based Bunge on April 23 fell 13 percent, the most in more than three months, after posting its second consecutive quarterly loss, partly because of lower demand for soybean meal. Still, the shares were up 7.4 percent this year before today as export demand for soybeans rose.