Soybean Crop Only Slightly Larger

USDA provided the soybean market with moderately friendly news on Nov. 9 as it raised its estimates of U.S. production and ending stocks by less than most observers had anticipated.

The 2006 U.S. soybean crop was pegged at a record 3.204 billion bushels, up 15 million bushels from USDA’s October crop estimate, but near the low end of trade production estimates, which averaged 3.240 billion bushels in a range from 3.193-3.316 billion bushels. The new crop estimate is 4.6% above the 2005 production level of 3.063 billion bushels.

The larger soybean production led USDA to make a modest increase of 10 million bushels in its projection of 2006-07 U.S. soybean ending stocks. U.S. soybean stocks are now projected at 565 million bushels, up from last year’s level of 449 million bushels.

That stocks figure is record large, but with demand also projected to be record large, soybean prices may continue to be influenced more strongly by the potential for surging corn prices to result in a sharp drop in soybean production next year.

As a result, USDA raised its projected range for the 2006-07 average on-farm price of soybeans by 50 cents/bu. to $5.40-6.40.

Despite the higher price expectations, USDA raised projected usage slightly due to a stronger projected crush. The projected U.S. crush was raised by 5 million bushels to 1.780 billion.

USDA’s higher soybean crop estimate was the result of slightly higher yields in western and northern production states.

Minnesota and Wisconsin yield estimates were raised by 1 bu./acre, while boosting South Dakota and North Dakota yields by 2 bu. each and raising Michigan’s yield by 3 bu. In contrast, USDA trimmed 1 bu./acre off yields in Illinois and Missouri.

USDA pegged the U.S. average yield at 43 bu./acre, up from its October estimate of 42.8 bu. and on par with last year’s national yield. The yield forecast compared with trade estimates averaging 43.5 bu./acre in a range from 42.5-45 bu.

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
http://www.brockreport.com/brockreport.