US 2008-09 soy stocks seen to tighten

The US Department of Agriculture (USDA) is expected to cut its estimates for 2008-09 soy ending stocks, with a strong export pace seen as the catalyst for the adjustment, according to analysts. The USDA will also provide its first projections for the 2009-10 carryout when it releases its May supply and demand reports Tuesday (May 12).

 

The average of estimates from analysts surveyed by Dow Jones Newswires expect 2008-09 US ending stocks to come in below the previous month's estimate of 165 million bushels. The average of analysts' estimates surveyed by Dow Jones Newswires project 2008-09 marketing year ending stocks at 130 million bushels from a range of 86 million to 148 million bushels.

 

The USDA's report is scheduled for release at 8:30 a.m. EDT (1230 GMT) Tuesday.

 

Analysts anticipate if the USDA makes changes to the 2008-09 balance sheet, it will adjust usage figures, with strong potential for an increase in exports.

 

The market only needs to load 197 million bushels the rest of the year compared to 243 million last year to reach USDA's current export projection, analysts said.

 

China and others have been robust buyers of US supplies since earlier this year because of Argentina procurement concerns, said North American Risk Management Service analyst Jerry Gidel in a market report.

 

The USDA has upped its export forecast by 160 million bushels from its December outlook, with expectations they will increase this year's exports again, Gidel added.

 

Through April 30, accumulated US soy export commitments total 1.192 billion bushels, up 12.3 percent from the previous year. The sales are currently 99 percent of the USDA's current export projection for the year at 1.210 billion with 17 weeks remaining in the 2008-09 marketing year.

 

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

 

Increased export demand for US soy products amid the uncertainty of Argentina export and soybean production potential has boosted US crush demand, said Anne Frick, senior oilseed analyst with Prudential Bache in New York.

 

"I'm projecting a lower residual use figure than the USDA is using on the assumption last year's crop size was overestimated," said Bill Nelson of Doane Advisory Service in St. Louis.

 

On the world scene, most analysts anticipate the USDA will downwardly adjust Argentina's production data amid crop damage from a summer drought.

 

"The lack of moisture over the last six to eight weeks in the world's third largest soy producing nation has dropped Argentina's output prospects sharply because of extremely poor double crop soy yields as their harvest winds down," said Jerry Gidel.

 

Private crop estimates suggest the USDA needs to trim Argentina's crop down to 34 million tonnes.

 

Meanwhile, most analysts expect the USDA to hold off on adjustments to the Brazilian crop as the current USDA forecast is below private crop estimates.

 

The USDA will release its first supply and demand tables for the 2009-10 marketing year Tuesday. Traders do not anticipate any substantial line item changes from the numbers, which were released during the USDA's Outlook Forum in February, on the demand side of the equation.

 

The average of analysts' estimates surveyed by Dow Jones project 2009-10 marketing year ending stocks at 239 million bushels from a range of 148 million to 528 million bushels.

 

The data will be reflective of the normal harvested percentage of the March 31 prospective plantings estimate. However, a debate over what yield the USDA uses will clearly outline the fundamental picture for the 2009-10 marketing year.

 

Otherwise, the market would have to have a dramatic occurrence to aggressively alter new-crop line items amid the amount of uncertainties that remain ahead of the 2009-10 marketing year, analysts said.