December 10, 2004

USDA Seen Lowering US Soy Exports by 10-15 Million Bushels

The 2004-05 US soybean export figure is expected to fall 10 million to 15 million bushels Friday in the US Department of Agriculture's December crop production report. This is due to a sluggish export pace and competition from the South American crop.

The USDA's December crop production report is scheduled to be released Friday at 7:30 a.m. CST (1330 GMT).

According to industry experts, the current US soybean export pace is lagging behind last year's export sales rate due to the very high cost of exporting across the ocean, and weak crush margins worldwide.

"The sales pace is not running strong enough to get to the USDA forecast," said Dale Gustafson, market analyst for Citigroup Global Markets in Chicago.

In the November crop production report, the USDA said US soybean exports for the 2004-05 year would total 1.01 billion bushels, up sharply from the previous year's export sales of 885 million bushels due to a record- large crop in the US this year. So far, export sales are running behind last year's pace, according to the USDA. Accumulated exports as a percentage of total exports for the 13th week in the marketing year came to 36%, which compares to 40% this time last year.

At the same time, analysts also figure China's total import number can also be pared down by 0.5 million to 1.0 million metric tons. Charlie Sernatinger, industry analyst for O'Connor in Chicago, said if China - the No. 1 importer of US soybeans - has imports cut by 1 million tons, that would mean about a 10 million bushel reduction in exports for the US and 20 million for South America. The reason for a reduction, he said, is the weakness of crush margins.

Jason Roose, commodity analyst for US Commodities in West Des Moines, Iowa, said a reduction on the forecast of overall sales can be expected because of competition from South America. Both Brazil and Argentina are expected to grow record large crops this year, with Brazil's crop pegged at 64.5 million metric tons and Argentina's crop figured at 39 million tons.

Outside of exports, few changes are expected in this report in both the US and world balance sheets, analysts said. Instead, the USDA will likely wait until the January report for any major adjustments.