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USDA Outlook estimates negative for soybean market, friendly to corn

Agriculture.com Staff 02/17/2006 @ 2:30pm

Crop size projections made on Friday from the USDA Agriculture Outlook Forum are seen as positive for the corn market, negative for soybeans, one analyst told Agriculture Online.

USDA dropped 2006-07 U.S. corn plantings 1.3 million acres from 2005 seedings to total 80.5 million acres. Trend-based 2006 U.S. corn yields are projected at 147.7 bushels per acre, slightly lower than 2005 yields of 147.9 bushels per acre. Harvested acreage was put at 73.2 million acres, putting U.S. 2006-07 corn production at 10.810 billion bushels.

Also, the USDA estimated 2006-07 corn ending stocks at 1.726 billion bushels, with total U.S. 2006-07 corn used for feed and residual seen at 5.950 billion bushels while corn used for ethanol fuel was put at 2.150 billion bushels.

Jason Ward, North Star Commodity Investment Co. analyst, said the corn ending stocks figure is positive for the market. "Any ending stocks number, as long as it doesn't have a two in front of it, psychologically is supportive for price."

Because USDA used a lower ending stocks figure, they were able to raise 2006-07 corn exports from 1.850 billion bushels to 2.0 billion bushels, Ward said. "That 2.0 billion bushel figure is probably too high," Ward said. "We haven't exported over 2.0 billion bushels since 1996. It's just physically too tough to do. This is the only number that I dispute out of all the corn numbers released by the USDA."

For soybeans, the USDA estimated U.S. 2006-07 soybean production at 2.965 billion bushels, compared to 3.086 billion last year. Planted acres were up 1.9 million to 74 million acres, the national soybean yield was pegged at 40.7 bushels per acre and harvested acreage was seen at 72.9 million. "I agree with the idea that U.S. farmers will plant more soybeans, my seed salesman tells me the same thing," Ward said. "The added acres will come from fringe soybean states, so the yields will probably not be as good."

U.S. soybean ending stocks were pegged at 560 million bushels, up just slightly from final 2005-06 stocks of 555 million. "This is a record carryout," Ward said. "You're going to have to take South America's crop a lot lower to keep bean prices to where they are at today. That 560 million bushel carryout doesn't warrant a Nov. CBOT futures price of $6.30 per bushel."

The average U.S. soybean price was projected at $5.15 a bushel, down from the 2005-06 average of $5.50 a bushel, the government said.

The USDA estimated the 2006-07 U.S. crush at 1.730 billion bushels and U.S. export sales were projected at 1.075 billion bushels.

Meanwhile, the USDA said that the potential for a widespread Asian soybean rust outbreak has "largely abated" after the disease failed to pose a significant threat in 2005.

For wheat, the USDA forecast 2006-07 U.S. wheat plantings would increase 0.8 million acres from 2005 seedings to total 58 million acres. U.S. 2006-07 wheat yields are anticipated to rise to 42.6 bushels per acre, above the actual 2005 yields of 42 bushels per acre. Harvested U.S. 2006-07 wheat acreage was put at 48.7 million acres, with U.S. wheat production at 2.075 billion bushels, the USDA said. Final U.S. 2005-06 wheat production was 2.105 billion bushels.

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