USDA seen to trim estimates for grain inventory

Strong export demand for US corn and soy should prompt the USDA to trim its estimates for the US 2009/10 stockpiles of both commodities this week, analysts said.

The smaller stocks at year's end should carry through to the new crop year, resulting in slight reductions in USDA's corn and soy inventory estimates for 2010/11 as well.

For wheat, an expected smaller US 2010 production figure should prompt a cut in USDA's 2010/11 wheat ending stocks estimate from last month.

But any changes in USDA's June 10 supply/demand report were seen as "fine-tuning," with bigger adjustments likely delayed until after the agency issues key acreage and quarterly stocks data on June 30. "Traditionally there is not a lot of excitement in this mid-June report. We don't tend to get a lot of changes," said Jerry Gidel of North America Risk Management Services.

Chicago Board of Trade corn futures slumped to eight-month lows this week, largely due to prospects for a bumper crop. The rosy outlook also pushed front-month CBOT soy prices to near three-month lows.

While most analysts downplayed the likelihood of USDA adjusting its yield and production forecasts in June, some said such a move was not unprecedented.

"With crop condition ratings up, we've seen USDA raise those numbers in the past," said Don Roose, analyst with US Commodities in West Des Moines, Iowa.

In its weekly Crop Progress report, USDA said 76% of the US corn crop and 75% of the soy crop was rated good to excellent.

In its initial estimates for the 2010 harvest last month, USDA forecast that US farmers would grow the largest corn crop on record, at 13.4 billion bushels, with an average yield of 163.5 bushels per acre.