September 23, 2004

USDA Cuts Estimate For U.S. Soybean Crop

The United States Department of Agriculture (USDA) released on Sept 10 its new forecast on the 2004 soybean crop.

The general expectation pointed to the maintenance of the August estimate of 78.3 million tons, or some increase to around 79.0 million tons. However the report reduced the forecast to 77.2 million tons. Thus, there is a 1.4% decline from the previous report and still a growth of 17.3% over the 65.8 million tons of the crop obtained in 2003. For the fourth year in a row the US soybean production gets well below the early expectation, which was again between 80 and 81 million tons this year.

Despite the new production cut, the USDA promoted adjustments downwards in consumption, and had rather sustain the forecast for ending stocks of soybeans in this new season which is starting at 5.17 million tons. The projection for crushings moved from 44.23 to 43.95 million tons, owing to the lower expectation on soymeal exports.

Exports were reduced from 28.03 to 27.22 million tons, due to the decrease in the early intention of world imports. For the current crop, ending stocks were also sustained at 2.86 million tons, once the adjustment downwards in exports, which must close at 24.09 million tons, was totally offset by the increase in crushings to 41.78 million tons.

In world terms, the highlight was on the increase in the crop projection for India, moving to 7.0 million tons, an increase in the carryover of the 2003/04 crop from 36.19 to 37.36 million tons, as well as the decrease in the expectation of soybean imports by China, moving from 23.0 to 22.5 million tons.

For these reasons, in spite of the cut in the US crop, the world production of 2004/05 ended up revised slightly upwards, moving from 222.84 to 222.99 million tons. It also drove the carryover from 50.20 to 51.54 million tons. Hence the positive impact on prices of the cut in the US crop turned out eased in the futures market of the Chicago Board of Trade.