October 11, 2004

USDA Seen Raising New Soy Crop Size To 3.018 Billion Bu

U.S. 2004-05 soybean production is expected to rise to about 3.018 billion bushels Tuesday in the U.S. Department of Agriculture's October crop production report, due to remarkable yields seen during soybean harvest in the U.S., according to a survey of industry analysts.
 
The USDA's October report is scheduled to be released 0730 CT (1330 GMT) Tuesday.
 
The estimated production figure is a 182-million-bushel increase from the September report. Opinions varied, though, on exactly how much the USDA will raise its crop estimate in this report.
 
Joe Victor, industry analyst with Allendale, Inc., in McHenry, Ill., said while yields are coming in much better-than-expected, recent frosts have pared back total yield potential. Victor's crop size estimate in the coming report was on the bottom end of survey estimates, which ranged from 2.941 billion to 3.107 billion bushels.
 
"We had a surge of at least two frosts in the northern areas. We know that the August frost did a fair amount of damage," Victor said. Heavy rains created ponds in soybean fields, which were also a hassle for farmers, Victor added.
 
Sid Love, analyst for Kropf and Love Consulting in Overland Park, Kan., also sees a tamer number for yields and production in this report.
 
"They just got done cutting (the yield estimate) the month before, and now they're going to have to say that they're wrong. They'll have to reverse themselves. If they're going to do that, they'll do it on a gradual basis," Love said.
 
In September report, the production figure was lowered to 2.836 billion bushels, down from 2.877 billion in the previous report, and yields fell to 38.5 bushels per acre, down from 39.1 bushels in August. For this report, soybean yield estimates averaged 41.0 bushels per acre with a range of 39.9 to 42.2 bushels.
 
Because of the probable reversal, Love said, the government will not likely take the figure above 3 billion bushels right away. "That's an awful big jump for the government to make," he said.
 
Still, analysts are expecting the size of the crop to increase in this report due to the remarkable yields seen throughout the Midwest during harvest. To match the growing production, year-end inventories are also expected to rise. Estimates on ending stocks for the 2004-05 marketing year averaged 364 million bushels, up sharply from the 190 million bushel figure as reported in September. Estimates ranged from 249 million to 450 million bushels.
 
"If you're going to jump the crop by a couple of hundred million bushels and you raise the carryout, that all makes sense," Love said, adding that usage will also likely increase due to a higher availability and cheaper prices of beans.