USDA Raises 2004-05 Soy Stocks

USDA raised its estimate of 2004-2005 U.S. soybean ending stocks in Thursday’s monthly supply/demand update and projected world stocks will rise by more than 40% next year due to larger crops in the U.S. and South America.

USDA pegged U.S. ending stocks for 2004-2005 at 220 million bushels, up from a May estimate of 190 million due to reduced expectations for both exports and the U.S. crush. USDA trimmed both usage categories by 15 million bushels.

Ending stocks for 2003-2004 were left unchanged at 115 million bushels. USDA also made no changes in old-crop exports or crush, even though exports appear to be overestimated with the crush underestimated.

On the world soybean supply/demand balance sheet, USDA raised 2003-2004 world ending stocks by 1.29 million metric tons to 33.01 million tons, reflecting slower usage. China’s projected imports were cut by 1.25 million tons to 19 million tons.

However, USDA did not lower its crop estimates for Brazil and Argentina, even though it currently pegs production above estimates coming out of those countries.

USDA’s first projection for 2004-2005 puts ending stocks at a record 46.69 million metric tons, up 41% from 2003-2004.

USDA pegs Brazil’s 2004-2005 crop at a record 66 million tons, which is in line with an estimate released in May by the U.S. agricultural attaché in Brazil. That projection assumes a 10% increase in acreage and a return to a trend-line yield.

USDA pegs Argentina’s 2004-2005 crop at a record 39 million tons on better yields.

On the demand side, USDA assumes a rebound in Chinese soybean imports to 24 million tons, up 5 million from this year.

The only realistic interpretation of USDA’s 2004-2005 world supply/demand estimates is that they are extremely bearish for soybean prices.

Editors note: Richard Brock, The Corn and Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at www.brockreport.com.