USDA Cuts Soy Crop; Slashes U.S. Carryout

 

The soybean [4] market received bullish news from USDA [5] 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 [6] 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.