November 11, 2009

US historic soy crop surprises industry and exports set to increase

US 2009 soy production is expected reach a record high 3.32 billion bushels, as the US Department of Agriculture on Tuesday (Nov 10) raised its crop size and yield estimates.

In its monthly crop production report, the USDA said the 2009 crop estimate is two-percent above its October forecast and 12-percent above 2008's level. Yields are also seen up from last month and last year, at 43.3 bushels per acre, which, if realized, would be the largest ever recorded. The USDA raised yields by 0.9 bushels from October's estimate, which itself would've been a record, and 3.6 bushels from last year.

The soy crop estimate is bigger than what the industry was expecting. Analysts surveyed by Dow Jones Newswires expected the soy crop at 3.269 billion bushels, with a yield of 42.7 bushels. The rise over the previous month was expected, but the gain was greater than anticipated. Early harvest results have shown high yields, even as harvest was delayed last month because of wet weather. Harvest is 75 percent done as of Sunday (Nov 8), below the 92 percent done on average as of this date.

The USDA said yields are either unchanged or higher in all states except Georgia, Iowa, Mississippi, and Texas. Heavy rains in October in Mississippi will lead to "hindered yield expectations," the USDA said.

Some analysts expected to see USDA possibly cut harvested acres because of problems with excessive rains in the Delta, but the USDA left its forecast for harvested area unchanged at 76.6 million acres.

The greater production caused USDA to lift its estimate for the ending stocks by 40 million bushels, to 270 million for soy, compared to last month, the government said in its monthly supply and demand report. Ending stocks are what is left after accounting for supply and use.

Some of the extra production is going to more exports and more soy processing. Soy exports rose by 20 million bushels to 1.325 billion as import demand by China, EU countries and Russia are seen consuming more. The USDA also lifted the soy crush by five million bushels to 1.695 billion bushels.

The USDA also noted greater competition for US soy from South America as that region is expected to grow more of the oilseed. USDA cited increases for Brazil, Argentina, Paraguay and Uruguay. Brazil, the second biggest soy producer after the US, is expected to harvest 63 million tonnes, up one million from October because of an expected hike in harvested area. Argentina's production is seen up 500,000 tonnes to 53 million as producers switch some land to soy from sunflower seed.