November 10, 2010

CBOT soy prices jump on surprise US crop downgrade

CBOT soy prices soared nearly 6% to top US$13 a bushel for the first time in two years, after a surprise forecast from US officials for US soy crop.

US officials have, for a second month, made a surprise cut to their forecast for US soy, which is the world's biggest, putting the country on course for a further year of thin inventories.

The USDA, in a flagship monthly report on world crop supply and demand, made a number of estimate revisions deemed supportive for prices, trimming its forecast for wheat inventories and cutting its estimate for corn stocks further than the market had expected.

However, the cut to the soy yield, by 0.5 bushels per acre to 43.9 bushels per acre, was deemed a particular surprise. Analysts had expected a small rise in the estimate, to 44.7 bushels per acre.

The price of Chicago's November soy lot touched US$13.35 a bushel before easing to close up 4% higher at US$13.19 one-quarter a bushel.

The US harvest is still on course to set a record of 3.38 billionn bushels, despite the fresh yield estimate, reflecting in particular cuts to hopes for production in Kansas, Nebraska, New Jersey, and South Dakota.

However, the crop's advantage over last year's was cut to 18 million bushels.

And, combined with a higher estimate for exports - a revision traders had expected amid buoyant demand from China - the lowered production forecast put inventories on course to end 2010-11 at 185 million bushels.