August 13, 2010

US soy crop may gain on favourable weather and rainfall

The US soy crop will be 2.2% larger than a year ago after farmers planted more and warm weather and ample rainfall helped boost yield potential, the government said.

The harvest will total 3.433 billion bushels, up from a record 3.359 billion in 2009, the USDA said in its estimate for this year's crop. The average estimate was 3.36 billion bushels, according to analysts. A month ago, the USDA predicted a crop of 3.345 billion bushels.

Soy for November delivery yesterday fell 6.5 cents, or 0.6%, to US$10.155 a bushel. The most-active contract has dropped 2.2% from a year ago.

Rising supplies of soy may improve margins for oilseed processors such as Bunge Ltd. and Archer Daniels Midland Co. The crush spread-the difference between the cost of a bushel of soy and the value of the meal and oil it can produce - has risen 20% this year.

A record 78.87 million acres (36 million hectares) of soy were sown this year, up 1.8% from 2009, according to the USDA. Farmers boosted soy and corn acreage after excessive rain cut winter-wheat plantings.

Each acre will produce an estimated 44 bushels of soy, unchanged from last year's record, the USDA said. Analysts expected 43.1 bushels, on average. In July, the department forecast an average yield of 42.9 bushels.

Reserve supplies before next year's harvest will total 360 million bushels, unchanged from a month ago, the USDA said. The surplus on August 31 of this year will rise to 160 million bushels, from 138 million bushels a year earlier, the smallest since 2004, according to reports.

Soy cash prices will average US$9.25 a bushel in the crop year that begins September 1, up from US$8.85 forecast a month ago and down from US$9.60 this year, the USDA said.

Meanwhile, world soy output in the crop year that begins October 1 will total 253.7 million tonnes, up from 251.3 million tonnes forecast a month ago and down from a record 259.9 million tonnes last year, the USDA said.

Inventories next year before the Northern Hemisphere harvests will total 64.7 million tonnes, up from 63.5 million this year. Traders are expecting 66.87 million tonnes, on average.