March 10, 2009 / 1:32 PM / 11 years ago

PREVIEW-Big exports, Argentine drought trim US soy

    * Trade expects USDA to trim soy supply estimate 
    * Corn stocks to increase, wheat nearly flat 
    * Argentine soy crop may be inched upward 
    * Analysts' estimates for end stocks [nN09401981] 
    By Sam Nelson 
    CHICAGO, March 9 (Reuters) - Big exports of U.S. soy, led by aggressive 
Chinese buying and a rare drought in Argentina that hurt that crop, are 
combining to trim supplies of U.S. soy for the current 2008/09 marketing 
    "I'm still optimistic USDA will wake up and smell the roses on soybean 
exports and cut the bean stocks another 25 million bushels," said Jerry 
Gidel, analyst for North America Risk Management Inc. 
    The U.S. Department of Agriculture early Wednesday will release its 
March supply/demand report. An average of analysts' estimates pegged the 
ending stocks of U.S. soy this year at 195 million bushels. That's down 
from 210 million forecast in February and below the 205 million a year ago 
and sharply down from the 574 million bushels of a couple years ago. 
    "The lack of Argentine FOB (export) offers and the political 
uncertainty in the Argentine sector are going to keep U.S. bean sales very 
strong," said Roy Huckabay, analyst for Chicago-based trade house The Linn 
    Also, USDA early Wednesday will release its updated estimates for 
global crops including fresh outlooks for Brazil and Argentina, the number 
two and three world exporters of soy, respectively. 
    USDA already sharply reduced its estimate for Argentina's soy crop this 
year and trimmed Brazilian soy output in its February report, so analysts 
don't expect much of a shift in projections for the Southern Hemisphere 
    "I don't think they will change their Brazilian or Argentine crop 
estimates. But if they do make a change, it would likely be an increase in 
the Argentine bean estimate because of the improved rainfall," said Anne 
Frick, senior oilseed analyst with Prudential Bache Commodities. 
    In its February report, USDA slashed its forecast for Argentina's soy 
crop to 43.8 million tonnes from 49.5 million and cut Brazil's crop to 57.0 
million from 59.0 million tonnes. 
    Conversely, as soy supplies shrink, corn stocks keep increasing because 
of big production combined with diminished demand for corn from the 
cash-strapped livestock and chicken feeding sectors, slower exports and a 
struggling ethanol industry. 
    An analyst average pegged the ending supply of corn in the U.S. this 
marketing year at 1.8 billion bushels, up from 1.790 billion in February, 
well above the 1.624 billion a year ago and sharply above the 1.304 billion 
bushel carryout of two years ago. 
    "The corn ending stocks look a little bloated," said Don Roose, analyst 
and president of U.S. Commodities of Des Moines, Iowa. 
    Back-to-back bumper corn crops in the United States allowed corn 
supplies to grow despite the expansion of corn use for ethanol from only 
2.119 billion bushels two years ago to an estimated 3.6 billion bushels 
this year. 
    Waning exports of U.S. corn also are adding bushels to the ending 
    "On the corn I reduced exports by 25 million just reflecting the slow 
pace that we've had thus far and also 25 million bushels off the FSI 
(food-seed-industrial)," said Shawn McCambridge, analyst for Prudential 
    Last year, 2.436 billion bushels of corn were exported, well above the 
1.750 billion USDA has projected for this year. And corn for domestic 
feeding at 5.3 billion bushels this year is below the 5.938 billion of last 
    Analysts estimated U.S. wheat ending stocks at 656 million bushels, 
nearly unchanged from 655 million in February. 
    "I don't think there is anything that will make our (wheat) exports 
pick up. The Egyptian buying is done and we're not going to do any more 
soft red wheat exports, other than what we have done for China," Huckabay 
 (Reporting by Sam Nelson; additional reporting by Christine Stebbins, 
Karl Plume, Mark Weinraub and Lisa Shumaker; Editing by John Picinich) 
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