June 29, 2009

Record high US soy plantings seen

Burgeoning global demand for soy, prices hovering at 8-month highs and US supplies likely at 32-year lows are leading to expectations for a record high sowing of soy in the United States this year.


Some analysts noted the expansion in soy acreage was also fueled by farmers not able to plant the entire corn crop in the Midwest due to excessive rain in the spring.


Randy Mittelstaedt, analyst for Chicago trade house R.J. O'Brien said very poor planting in the Eastern Belt and strength in soy prices should increase soy acreage but lose some corn acreage.


The US Department of Agriculture early Tuesday (June 30) will release its June plantings report. An average of analysts' estimates pegged this year's area at a record 78.121 million acres, up nearly 2.5 million acres, or 3.2 percent, from the previous record last year.


Shawn McCambridge, analyst for Prudential Bache Commodities said the weather reduced corn area in the eastern Corn Belt but the Western may keep a real modest crop.


There was a huge range of estimates for the soy area, from a low of 75.3 million to a high of 79.631 million.


Alaron Trading was at the low end of estimates with an outlook for 75.3 million and just above that was The Price Group's forecast for 76.7 million acres.


Tim Hannagan, analyst for Alaron Trading noted that nine percent of soy has not been planted due to the June 20th cutoff date, hence, the low number.


Bryce Knorr, senior editor of Farm Futures magazine, said a wet spring cut into corn and spring wheat area, leading to a huge jump in soybean acreage to 79.631 million, which was the highest area reported in the Reuters poll of analysts.


The Linn Group analyst Roy Huckabay, who pegged soy area at 79.0 million, said spring wheat and corn in the Dakotas are lost, hence, beans picked up.  Huckabay also said wet weather in the eastern Midwest caused a big switch to soy away from corn.


The average of analysts' estimates for corn acreage was 83.961 million, down from the area last year of 85.982 million.


US wheat acreage this year was pegged by analysts at 58.243 million, down from 63.147 million last year.


Wheat prices plunged from record highs set early last year, leading farmers away from growing wheat.


Also, the USDA on Tuesday will release its quarterly grain stocks report, listing the supply of soy, corn and wheat in the United States on June 1.


Soy supplies were estimated at 585 million bushels, down from 676 million a year ago.


Mittelstaedt said there is plenty of uncertainty in the quality stock numbers for beans due to tight balance sheet.


Corn supplies were pegged at 4.178 billion bushels, up from 4.028 billion on June 1, 2008.


Mittelstaedt said domestic demand is very poor for meal and corn.


Livestock numbers continue to run well below a year ago. Is quarterly feed usage down 5 percent or down 10 percent -- that could be a pretty big swing factor in the corn stocks number, he said.


An average of analysts' estimates pegged the wheat stocks at a plentiful 670 million bushels more than double the 306 million bushels of a year ago.