February 8, 2010

USDA seen tightening US soy carryout forecasts

The USDA is expected to fine tune its February US soy supply-and-demand tables, with alterations to exports and crush projections tightening the balance sheet.

The report is scheduled to be released on Tuesday (Feb 9).

The average of analyst's estimates peg 2009-10 US soy ending stocks at 219 million bushels, down 26 million from January's forecast. The estimates ranged between 170 million and 245 million bushels.

Most analysts' views on balance-sheet line items are consistent, calling for a change in crush and exports. A strong export pace has analysts anticipating increased forecasts for US exports from the USDA in its February supply-and-demand report.

"I continue to look for USDA to up exports, and there is a strong argument for a higher crush following record processing in December," said analyst Bill Nelson. The bottom line is there will be higher usage, he said, but the potential for a lower residual figure may offset some of the adjustments.

The USDA projected 2009-10 soy exports at 1.375 billion bushels in January. Accumulated soy supplies inspected for export in the first 22 weeks of the 2009-10 marketing year that began September 1 total 932.5 million bushels.

Oilseed analyst Anne Frick is looking for a 25-million-bushel rise in exports and a 10-million-bushel increase in the crush.

However, some analysts are not looking for much of an adjustment in the domestic balance sheet amid the potential for demand to shift to southern-hemisphere origins.

Tuesday's USDA report will be important "more so from the world numbers," said Don Roose, president of US Commodities. "I think the US numbers are kind of stuck," he said.

Analysts are expected to watch the USDA's South American soy-production forecasts and their effects on the global balance sheet.

South American crops have benefited from "excellent weather" and "ideal growing conditions," and that could lead to upward adjustments of 500,000 tonnes in both Brazil and Argentina, said Roose.

Generally, analysts anticipate a higher projection for Brazilian output. However, there is uncertainty about the potential for a change in the size of the Argentine crop.

Frick said that Brazil's crop could be raised by 500,000 tonnes to 65.5 million tonnes, with Argentina's crop left unchanged because it is still early for Argentina and the USDA already anticipates a large crop there.

"I think the South American crops are bigger, and the USDA has a lot of catching up to do," said analyst Roy Huckabay.

"I think that the acreage shifts have changed a little bit from what was originally thought, as a slowdown in planting corn in Argentina resulted in a few more bean acres," he said.