September 7, 2006

 

Higher soy consumption to be met by higher production

 

 

The soybean market apparently expects a larger production forecast on Sep 12, says a University of Illinois Extension marketing specialist.

 

This is because soy prices have fallen sharply even though the USDA August production forecast was 100 million bushels less than expected. This would reflect market expectations the Sep 12 production forecast would be large.

 

Prices have declined even though consumption has remained large, said Darrel  Good, University of Illinois Extension marketing specialist.

 

Consumption of soybeans during the 2005-06 marketing year ended on Aug 31 likely exceeded the most recent USDA projection of 2.8 billion bushels, he said.

 

Exports have exceeded expectations. USDA export estimates for July and August suggest that exports for the year reached 935 million bushels, five million above the current USDA projection.

 

However, improving crop conditions have offset the high rate of consumption, Good noted.

 

For example, the percentage of the US soybean crop rated in good or excellent condition increased to 59 percent, well above the long-term average for that date.

 

The improved crop ratings raised hopes that yields would be improved too, Good said.

 

However crop condition ratings at the end of the season remains to be seen, Good said. If crop ratings are maintained at this level, yields could exceed forecasts and reach 42.2 bushels and acre. 

 

With an average yield of 42.2 bushels the soy crop would be very near the record crop of 2004 and cause stocks to exceed 600 million bushels, even with increased use, Good added.