The soybean  market received bullish news from USDA  Tuesday morning as the agency cut its estimate of the U.S. soybean crop again and lowered its projection of the 2010-2011 U.S. carryout more than expected.
USDA slashed its estimate of the U.S. soybean carryout by 80 million bushels, or 30%, to 185 million bushels compared with trade estimates averaging 240 million bushels in a range from 150 million to 312 million bushels.
The U.S. soybean carryout is now seen rising only 34 million bushels from the 2009-2010 level despite production reaching a record high for the second year in a row.
USDA was expected to raise soybean production due to good yields, but its monthly Crop Production Report  pegged the U.S. crop at 3.375 billion bushels, down 33 million bushels from its previous estimate and toward the low end of trade expectations that averaged 3.426billion bushels in a range from 3.350 billion to 3.483 billion.
USDA’ s latest estimate of the U.S. soybean yield came in at 43.9 bu./acre, down from its October estimate of 44.4 bu. and near the low end of estimates that averaged 44.6 bu. in a range from 43.8 bu. to 45.3 bu.
Most of the production decline came in western states. USDA lowered its yield estimates for Kansas, Nebraska and South Dakota by 2 bu./acre each.
As expected USDA’s monthly supply/demand update raised projected soybean usage due to strong export demand from China.
USDA raised projected U.S. soybean exports by 50 million bushels to a record 1.570 billion bushels. Exports are now seen rising 4.8% from the 2009-2010 level.
As a result of the smaller carryout, USDA raised its projected range for the average on-farm price of soybeans by 70¢/bu. on each end to $10.70-12.20/bu.
In its world supply/demand balance sheet, USDA raised its estimate of China’s 2010-2011 soybean imports by another 2 million metric tons (mmt) to 57 mmt.
Despite the cut in U.S. production and the increase in Chinese imports, however, USDA’s projection of 2010-2011 world ending stocks was virtually unchanged at 61.4 mmt, up from 60.4 mmt at the end of 2009-2010.
USDA raised projected Brazilian production by 500,000 metric tons to 67.5 mmt due to an increase in expected plantings.
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.