November 10, 2005

 

US 2005 soy crop seen over 3 billion bushels
 

 

US soybean harvest yield results came in better than expected, and that has analysts expecting the USDA to bump up its production forecast over the 3-billion-bushel mark in Thursday's November crop report.

 

The USDA releases its November crop report Thursday 7:30 a.m. CST (1330 GMT).

 

The average of analysts' estimates project a crop size of 3.016 billion bushels with a yield of 42.3 bushels per acre. The averages ranged from 2.952 billion to 3.087 billion bushels for production and 41.4 to 43.3 for yields. In October, USDA projected a crop size of 2.967 billion bushels using a yield of 41.6 bushels an acre.

 

US soybean harvest results have shown better than expected soybean yields and that is likely to provide the stimulus to raise the production forecast. There is a general consensus among the trade for an increase in production.

 

Analysts said the increase is a follow-up to October projections that limited production potential due to a cut in overall 2005 acreage.

 

With 96 percent of the soybean crop harvested and favourable fall conditions limiting field losses, the market knows what it has, as big yields were reported across the belt, even in dry areas that suffered from drought conditions, said Don Roose, president US Commodities in West Des Moines, Iowa.

 

However, Mike Zuzolo of Risk Management Commodities in Lafayette Ind., forecasts a slightly lower crop projection than the USDA forecast in October at 2.952 billion bushels, citing producer reports of falling eastern belt yields once farmers got into last half of harvesting in Indiana, Ohio, Michigan and Kentucky.

 

 

Supply and Demand

 

Ending supply forecasts are anticipated to climb above 300 million bushels, as growing production forecasts and questions regarding the USDA's export forecast raise the potential for an increase in the carryout.

 

The scariest thing that can come from the reports is not production but what will the USDA do with carryover projections, said John Kleist of Kleist Ag Consulting.

 

The average of analysts estimates projects ending stocks at 313 million bushels. The averages ranged from 270 million to 351 million bushels. In October, USDA projected the 2005-06 carryout at 260 million.

 

Analysts say a reduction in export forecasts coupled with an expected rise in 2005 production estimates could translate into non-threatening carryover inventories.

 

In October, the USDA projected 2005-06 US soybean exports at 1.12 billion bushels, up 20 million bushels from 2004-05 marketing-year export total. Weekly export commitments and shipments through Oct 27 are currently running 24 percent behind last year's pace, according to the USDA.

 

Some analyst see the potential for a 20- to 40-million-bushel reduction in exports, as port delays at the US Gulf early in the marketing year, Chinese and European purchases lagging behind last year's pace coupled with concerns over bird flu trimming feed demand overseas as factors leading to a slow pace of export bookings.

 

However, many analysts do not anticipate an adjustment at this time, expecting a pickup in exports during the January to March period will offset the slow start to the marketing year.

 

Roger Knapp of STA Trading Services in Memphis, Tennessee, said the potential is there for an increase in the crush amid favourable margins and good domestic demand.

 

In the soy products, analysts expect the USDA to adjust beginning stocks for both soyoil and soymeal, with the Census Bureau's stocks figure representing the end of the marketing year for soyoil 120 million pounds higher than October's 2004-05 USDA ending stock projections. Census soymeal stocks were well below USDA's October 2004-05 ending inventory estimates.

 

In world balance sheets, analysts look for modest upward revision in world soybean production. However, uncertainty continues to surround Brazil's 2005-06 production estimates, as traders feel it's to early to call for a reduction in Brazil's acreage in the middle of their planting season.