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Corn+Soybean Digest

Soybean S/D Data Largely Neutral, Corn Negative

Friday morning’s USDA supply/demand data should be neutral to slightly negative for soybean prices as the USDA cut old-crop ending stocks in line with expectations and left its 2010-2011 soybean carryout estimate unchanged.

USDA cut its 2009-2010 soybean carryout projection by 10 million bushels to 175 million bushels vs. trade estimates averaging 171 million bushels in a range from 138 million to 195 million bushels.

The cut in the old-crop carryout was based on the lower-than-expected June 1 soybean stocks estimate released last week. USDA raised projected 2009-2010 exports by 5 million bushels and also raised the old-crop crush by 5 million bushels due to better than expected domestic soymeal disappearance.

USDA left its projection of the 2010-2011 soybean carryout unchanged at 360 million bushels compared with trade estimates averaging 354 million bushels in a range from 250 million to 387 million bushels.

The projected 2010 soybean crop was raised by 35 million bushels to reflect the increase in U.S. soybean plantings over the March planting intentions indicated by USDA’s June acreage survey.

However, USDA raised projected 2010-2011 soybean exports by 20 million bushels to reflect an increased import projection for China and also raised its projection of next year’s crush by 5 million bushels.

USDA raised its projection for the 2010-2011 season average on-farm price of soybeans by 10¢ on each end of the range to $8.10-9.60

The soybean market may discount the higher production estimate as acreage is widely expected to be lower than USDA’s acreage survey showed due to heavy June rains that prevented some acreage from being planted in parts of the Midwest.

Despite raising its estimate of 2010-2011 Chinese imports by 1 million tons to 50 million tons, USDA boosted its projection for next year’s world soybean ending stocks by another 770,000 metric tons to 67.76 million tons. That’s an increase of 2.41 million tons or 3.7% over the projected 2009-10 carryout.

The supply/demand update is likely to be slightly negative for corn prices as USDA did not lower its corn carryout estimates quite as much as the trade had expected.

USDA pegged 2009-2010 U.S. corn ending stocks at 1.478 million bushels, down 128 million bushels from its June estimate of 1.603 billion bushels but toward the high end of trade estimates that averaged 1.404 billion bushels in a range from 1.214 billion to 1.600 billion bushels.

USDA raised old-crop feed/residual use by 175 million bushels due to the strong third-quarter corn disappearance implied by the June 1 corn stocks number, but cut projected 2009-2010 corn-for-ethanol use by 50 million bushels to reflect the latest ethanol production data.

The agency cut its 2010-2011 U.S. corn carryout estimate by 200 million bushels to
1.373 billion bushels, compared with trade expectations averaging 1.337 billion bushels in a range from 833 million to 1.734 billion bushels.

Projected 2010 corn production was cut by 125 million bushels to reflect the lower planted acreage reported in the Acreage Report released June 30.

USDA left projected 2010-2011 feed/residual usage unchanged at 5.350 billion bushels, indicating it believes that this year’s high third-quarter corn disappearance reflects problems with the 2009 corn crop rather than increased demand.

Projected 2010-2011 U.S. corn exports were lowered by 50 million bushels due to tighter domestic supplies and higher U.S. corn prices.

USDA raised its season-average on-farm farm price projection for corn by 15¢ on both ends of the range to $3.45-4.05/bu., reflecting tighter supplies.

Friday’s report projected world corn ending stocks for 2010-2011 at 141.1 million metric tons, down 4.2% from a previous estimate of 147.32 due largely to smaller U.S. supplies.

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.

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