September 9, 2004

USDA Seen Raising New Soy Crop Size To 2.904 Billion Bu

U.S. 2004-05 soybean production is expected to rise 27 million bushels to 2.904 billion in the U.S. Department of Agriculture's September crop production report. This is due to more promising growing conditions in the U.S. soybean belt seen recently, according to a survey of industry analysts.

The USDA's September report is scheduled to be released 0730 CT (1330 GMT) Friday.

Patrick Hayes, senior market advisor for Stewart-Peterson in West Bend, Wisc, who was on the high end of production estimates at 2.955 billion bushels, said reports of soybean harvest in the southern U.S. have been promising with agronomists there anticipating a record crop for the region. The warmer temperatures and the threat of an early frost subsiding in the northern part of the belt are also encouraging factors, he said.

"There's still some concern up north, but with the (weather) reports right now, it looks like we might make it and get some good pod filling," Hayes said.

Jerry Gidel, analyst at North America Risk Management in Chicago, who guessed 2.846 billion bushels on production - which was on the low end of estimates ranging from 2.846 billion to 3.087 billion bushels - said that considering the cold August weather and field reports of pod counts not being that impressive, yields across the heart of the U.S. soybean belt might not be very impressive. Gidel estimates yields to be about 38.6 bushels per acre, which is under the average estimate of 39.4 bushels.

Even taking into consideration the impressive yields in the south and the promising crop particularly in Missouri, Illinois and Indiana, Gidel maintained that the overall size of the crop might not be as promising as some perceive.

"In general, the low pod counts, weather issues and maturity issues - if you put them all together, that's why I'm a little cautious about production," Gidel said.

Also garnering attention will be the export figure to China, analysts said. Charlie Sernatinger, analyst for O'Connor in Chicago, who put 2004-05 ending stocks at 225 million bushels, which was on the high-end of estimates ranging from 175 million to 253 million bushels and averaging 203 million bushels, said the new-crop export figure will likely need to be cut by about 40 million bushels to account for fewer exports to China. The cut would subsequently raise the new-crop ending stocks figure.

Analysts anticipate the USDA to cut one million to two million metric tons off China's overall soybean import figure in this report. In August, Chinese 2004-05 soybean imports totaled 23 million tons. Analysts attribute the decline in imports to the country growing a larger crop this year, and because of trade issues between the U.S. and China.

"I don't think it will collapse down to 20 (million tons) in a quick order," Gidel said. "The economic trend is very strong."