July 12, 2004



Analysts Anticipate Increase In Old-Crop US Soy Crush

Old-crop U.S. soybean crush is expected to be increased in Monday's supply and demand report due to strong domestic demand and soymeal values, analysts said in a survey.
The U.S. Department of Agriculture's July supply and demand report is scheduled to be released at 0730 CT (1230 GMT) Monday.
While some analysts say changes are unlikely, other analysts expect soybean crush to be increased by 10 million to 25 million bushels, up from 1.475 billion bushels in the June report, to account for strong domestic usage.
Dale Gustafson, analyst for Citigroup Global Markets in Chicago, attributes the expected increase in U.S. crush to strong values in soymeal.
"It's all in domestic meal demand. That's why it's up. You crush for meal," Gustafson said.
Soymeal prices recently topped out at $375.00 a short ton - the highest price since June 1973 when the price of soymeal at the CBOT went to $451.00. Historically high crush margins also are encouraging crushers to continue processing activities and seeking out soybean supplies. Wednesday, the Jly crush margin peaked at $1.06 before falling to 61 1/2 cents on Thursday.
Dan Basse, industry analyst at AgResource in Chicago, said in order to reach the USDA's old crush number of 1.475 billion bushels, usage would have to fall to between 70 million and 75 million bushels per month for the rest of the marketing year, which ends Sept. 1.
"We have to ration 129 million bushels in the last quarter," Basse said. "We've never rationed that much demand, even in 1973 when we embargoed exports."
If the crush number is increased as expected, the soymeal stocks figure would also likely be increased to 225,000 tons, up from the June figure of 175,000 tons said Anne Frick, oilseeds analyst for Prudential Securities in New York.
At the same time, 2003-04 soyoil carryout could fall by 35 million pounds from the June figure 175 million pounds, Gustafson said, even with an increase of production. Stronger domestic use, he said, accounts for the decline in oil stocks.
Soybean ending stocks are largely expected to remain unchanged at 115 million bushels. Others say another slight decrease is probable.
In the new-crop balance sheet, estimates on new-crop ending stocks averaged 209 million bushels with estimates ranging from 180 million to 246 million bushels. In the June report, the USDA put 2004-05 carryout at 220 million bushels. The expected decrease in the ending stocks forecasts, analysts said, is a result of the USDA factoring in the revised U.S. soybean acreage number released June 30 in the acreage report. Total 2004-05 U.S. soybean acreage was adjusted to 74.809 million acres, down from the March intentions report figure of 75.411 million acres. Holding the yield forecast steady at 40 bushels per acre, the new-crop production figure would consequently fall to 2.945 billion bushels, down from 2.965 billion figured in June. Analysts do not anticipate major changes in new-crop demand this early in the year.