Tuesday morning’s monthly supply/demand update from USDA appears neutral to bearish for the soybean market as the U.S. soybean balance sheet contained no real surprises, but the world balance sheet held some negative news.
As expected, USDA raised its estimate for old-crop U.S. soybean stocks based on a larger-than-expected June 1 soybean stocks number, but lowered its 2011-2012 soybean carryout projection slightly due to smaller-than-expected 2011 soybean plantings.
USDA raised its estimate of the 2010-2011 U.S. soybean carryout by 20 million bushels to 200 million compared with trade estimates that averaged 193 million bushels in a range from 160 million to 220 million bushels and the 2009-2010 carryout of 151 million bushels.
Projected old-crop exports were cut by another 20 million bushels to 1.520 billion bushels, partly due to lower imports by China. USDA lowered its estimate of the U.S. average on-farm price for 2010-2011 by a nickel to $11.35.
USDA cut its projection of the 2011-2012 U.S. soybean carryout by 15 million bushels to 175 million bushels compared with trade estimates that averaged 172 million bushels in a range from 140 million to 197 million.
USDA lowered expected U.S. soybean production by 60 million bushels based on the lower plantings reported in the June 30 Crop Acreage Report.
The cut to production more than offset a 25-million-bushel cut to next year’s projected U.S. exports by, which are now seen at 1.495 billion bushels. The lower export expectations reflect slower Chinese demand and increased export competition from South America.
Despite cutting next year's U.S. soybean carryout estimate, USDA slashed $1 off its projected range for the 2011-2012 on-farm average price of soybeans, reversing a June increase in its price forecast. USDA now projects U.S. on-farm soybean prices will average $12-14 next year.
USDA raised its projected 2010-2011 world soybean carryout by another 1.27 million metric tons to a record high 65.8 million tons, largely due to weaker-than-expected Chinese demand.
USDA slashed its projection for China’s old-crop soybean imports by another 2 million tons to 52 million. USDA was expected to lower Chinese imports, but the cut was expected to be more modest.
USDA’s projected 2011-2012 world soybean carryout rose by 2.91 million tons to 64.5 million. USDA cut next year’s projected Chinese imports by 1.5 million tons to 56.5 million tons.
Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.