Strong export pace may cut US soy ending stocks estimates

 

 

The USDA is expected to cut its estimates for 2009-10 soy ending stocks due to a strong export pace.

 

The USDA will also provide its first projections for the 2010-11 ending stocks, which represents the amount remaining after all supply and demand factors have been taken into account.

 

According to the average of estimates from analysts, 2009-10 US ending stocks are expected to come in at 182 million bushels, below the previous month's estimate of 190 million bushels. The estimates ranged from 160-205 million bushels.

 

Analysts expect that if the USDA makes changes to the 2009-10 balance sheet, it will adjust usage figures, with strong potential for an increase in exports and crush.

 

Through April 29, accumulated US soy export commitments total 1.375 billion bushels, up 15.4% from the previous year. The sales are 95% of the USDA's current export projection for the year at 1.445 billion with 17 weeks remaining in the 2009-10 marketing year.

 

Unless there is a large increase in cancellations or rolling of sales into the 2010-11 marketing year, which begins September 1, the percentage of sales that remain unshipped shows a need for an upward adjustment in exports, said Don Roose, president of US Commodities in West Des Moines, Iowa.

 

Meanwhile, analysts also see the potential for an increase in the crush and possible adjustment of the residual use figure.

 

A lot of analysts look for a bump in export and crush use, but residual use could be lowered to offset the higher usage. Residual use is a figure that measures the running total of the difference between the calculated stocks level and the actual stocks reported. The residual takes into account soybeans being in transit on barges and railcars and not in elevators or farm bins.

 

The cash market does not reflect tightness yet, and with South American supply movement increasing, the US may not be able to sustain the current crush and export pace, analysts said.

 

Globally, most analysts expect the USDA will hold steady on production estimates for Brazil and Argentina. Private crop estimates, however, suggest the USDA may need to raise Brazil's crop.

 

National Commodities Supply Corp., or Conab, estimates Brazil's 2009-10 soy crop at 67.9 million tonnes. The estimate is up 500,000 tonnes from Conab's April projection and from the USDA's April estimate as a result of increased yield expectations in the center-west and south.