USDA preview: Beans up, corn stable
Favorable yield results from the 2011 U.S. soybean harvest have most analysts surveyed by Dow Jones Newswires anticipating a modest increase on Wednesday in the U.S. Department of Agriculture's 2011 soybean crop projection.
USDA is scheduled to release its latest forecast for production, inventories and demand on Wednesday at 8:30 a.m. EDT (1230 GMT).
Most analysts look for yields to be increased in the report, but uncertainty has been raised about the potential for lost acres, as USDA incorporates reductions in the number of acres affected by flooding or drought reported by the USDA's Farm Service Agency.
In recent weeks, several private firms have released crop estimates that were above the USDA's September forecast.
"Despite concerns over finishing weather in many areas of the Midwest, soybean yields have generally exceeded expectations, as a result, we have increased our national bean yield 1.2 bushels per acre from our September estimate," analysts at the Linn Group in Chicago wrote in a pre-report market letter.
For October, the USDA will forecast the soybean harvest at 3.094 billion bushels, up 0.3% from its estimate a month ago, according to the average prediction of 23 analysts surveyed by Dow Jones Newswires. Estimates ranged from 3.050 billion to 3.162 billion bushels.
The survey predicts the USDA will forecast the average yield at 42.0 bushels an acre, 0.4% above last month's estimate. Estimates ranged from 41.0 bushels to 42.9 bushels an acre.
There is still some uncertainty surrounding soybean yields, as generally favorable yield reports from harvests could by offset by a reduction in yields from fields that were nipped by frost in the northern Midwest, said Don Roose, president Iowa-based brokerage U.S. Commodities.
Meanwhile, the government's outlook on the balance between supply and demand is expected to experience some adjustments in relation to the change in 2011-12 production and beginning stocks.
"If U.S. output rises just 22 million bushels, limited adjustments in bean's 2011/12 balance sheet are likely," Jerry Gidel, analyst with North America Risk Management Services, said. Domestically, more dramatic changes in U.S. livestock numbers are needed for soybeans' crush level to change much at this time, and the current strong protein demand from Asia and particularly China isn't likely to abate, so not making further cuts in U.S. exports until South America's prospects are better known seems a more prudent approach, he added.
As for the end of the crop year, the average of 20 analysts' estimates pegged inventories as of Aug. 31, 2012 at 181 million bushels, up from the September forecast of 165 million bushels. The estimates ranged from 153 million to 255 million bushels, reflecting uncertainty about 2011 production.