U.S. soybean supplies were expected to balloon 43 percent in the 2015/16 marketing year, despite a drop in production, as U.S. soybeans face increased competition on the export market, the U.S. government said on Tuesday.

In its first estimate of the supply situation for the 2015/16 marketing year, the U.S. Agriculture Department projected U.S. soybean ending stocks at 500 million bushels, up from 350 million bushels in the 2014/15 crop year.

That topped analysts' expectations for soybean ending stocks of 443 million in the 2015/16 crop year.

"It's a little bit of sticker shock at 500 million bushels," said Karl Setzer, analyst at MaxYield Cooperative. "It's been years since we've seen a number like that. I'm not very friendly soybeans right now. I don't see a lot of hope for them."

Chicago Board of Trade soybean futures, which had traded higher throughout the morning, turned lower after the report was released, with the benchmark July contract shedding about 10 cents when the data hit screens.

USDA forecast soybean production in 2015/16 at 3.850 billion bushels, down from 3.969 billion in 2014/15 due falling yields.

U.S. soybean exports were seen falling to 1.775 billion bushels from 1.800 billion. Brazil exports were seen rising to 49.75 million tonnes from 45.65 million and Argentina exports were seen rising to 8.50 million tonnes from 8.00 million.

USDA also said in its monthly supply and demand report that domestic corn ending stocks for 2015/16 would be 1.746 billion, down from 1.851 billion in 2014/15.

U.S. wheat ending stocks for 2015/16 were pegged at a bigger-than-expected 793 million bushels, up from 709 million bushels in 2014/15. USDA said U.S. wheat production would be 2.087 billion bushels.

U.S. winter wheat production was seen at 1.472 billion bushels, just 2 million bushels above trade expectations.

CBOT corn <0#C:> and wheat <0#W:> futures briefly turned lower after the report was released before turning back into positive territory.

World ending stocks of soybeans for 2015/16 were seen rising to 96.22 million tonnes from 85.54 million. World corn ending stocks were seen falling to 191.94 million tonnes and world wheat ending stocks were seen rising to 203.32 million tonnes.