February 10, 2010

US forecast for corn and soy supplies take a downturn

The USDA has cut its estimates for global inventories of corn and soy at the end of the marketing year.

Meanwhile, the USDA raised its forecast for Argentina's corn harvest in 2009-10 by 2.2 million tonnes.

"Growing conditions continue to improve, with additional rainfall in the main corn areas," the USDA said in a much-watched monthly report on global crop supply and demand.

For soy, the USDA, citing "higher yields", lifted its estimate for Brazilian production by one million tonnes to 66 million tonnes, putting the harvest on track to set a record by a wider margin than had been thought.

Nonetheless, the USDA cut its estimate for global inventories of both crops at the end of 2009-10, albeit by a modest 70,000 tonnes, to 59.73 million tonnes, for soy.

The decline reflected growing demand for the oilseed by US crushers, who are enjoying "strong" soymeal exports, and higher hopes for Chinese and Egyptian imports, again largely from the US.

"Although a record South American harvest is expected to reach the market in coming weeks, tight old-crop South American supplies resulting from last year's historic drought in Argentina continue to support US exports," the report said.

The USDA sliced its estimate for global corn inventories by 2.15 million tonnes to 134.04m tonnes, citing a lower estimate for Italian production and growing hopes for the grain's consumption by US ethanol plants.

The report's cuts of 1.15m tonnes to estimates for America's corn supplies at the end of the marketing year, and of 960,000 tonnes in the forecast for soy inventories, were a little below market forecasts.

Benson Quinn Commodities said the data would "add additional support to soy and corn, with both US and world ending stocks seen declining month-on-month, and with US stocks below the average trade estimates."