| 21:13 UK, 9th February 2010, by Agrimoney.com |
| US cuts estimates for corn and soy inventories |
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Washington has cut its forecasts for world inventories of corn and soybeans at the end of the marketing year, despite hiking estimates for South American production of both crops.
The US Department of Agriculture raised its forecast for Argentina's corn harvest in 2009-10 by 2.2m tonnes,. equivalent to the output of a mid-ranking European producing state such as Poland.
"Growing conditions continue to improve, with additional rainfall in the main corn areas," the department said in a much-watched monthly report on global crop supply and demand.
At 17.2m tonne Argentina' production of the grain is on course to jump 37% from last year, when output was dented by drought.
For soybeans, the USDA, citing "higher yields", lifted its estimate for Brazilian production by 1m tonnes to 66m tonnes, putting the harvest on track to set a record by a wider margin than had been thought.
Inventory cuts
Nonetheless, the department cut its estimate for global inventories of both crops at the end of 2009-10, albeit by a modest 70,000 tonnes, to 59.73m tonnes, for soybeans.
The decline reflected growing demand for the oilseed by US crushers, who are enjoying "strong" soymeal exports, and higher hopes for Chinese and Egyptian imports, again largely from the US.
"Although a record South American harvest is expected to reach the market in coming weeks, tight old-crop South American supplies resulting from last year's historic drought in Argentina continue to support US exports," the report said.
The USDA sliced its estimate for global corn stocks by 2.15m tonnes to 134.04m tonnes, citing a lower estimate for Italian production and growing hopes for the grain's consumption by US ethanol plants.
"November's record [US] ethanol production was up 3% from the previous record in October as higher prices for ethanol and distiller's grains boosted ethanol producer returns," the report said.
"Although returns have declined since November, recently lower corn prices continue to support profitability for ethanol producers."
'Mostly friendly'
The report's cuts of 1.15m tonnes to estimates for America's corn stocks at the end of the marketing year, and of 960,000 tonnes in the forecast for soybean inventories, were a little below market forecasts.
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USDA's key US corn revisions, 2009-10 (change from Jan estimate)
Food, seed, industrial use, 5.565bn bushels (+95m bushels)
Ethanol use, 11.12bn bushels (+95m bushels)
Exports: 2.000bn bushels (-50m bushels)
Year-end stocks: 1.719bn bushels (-45m bushels) | "In general, the report was mostly friendly corn and soybeans," Vic Lespinasse, analyst at GrainAnalyst.com, said while noting "no major surprises".
Benson Quinn Commodities said the data would "add additional support to soybeans and corn, with both US and world ending stocks seen declining month-on-month, [and] with US stocks below the average trade estimates."
Rival broker US Commodities said the estimates would "help to continue the short covering" which has halted a rout sparked by the USDA's last global crop supply and demand report, in January.
Vulnerable to surprises
The broker added that the report "does set up the need for a large South America crop".
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USDA's key US soy revisions, 2009-10 (change from Jan estimate)
Crush: 1.720bn bushels (+10m bushels)
Exports: 1.400bn bushels (+25m bushels)
Year-end stocks: 210m bushels (-35m bushels) | "If a production glitch occurs the market will take quick notice."
Corn for March delivery closed up 2.5 cents to $3.58 ½ a bushel in Chicago, with March soybeans losing early gains to end 2.5 cents lower at $9.24 ½ a bushel.
Wheat, for which the USDA made a small upward revision to US and world stocks, closed down 1.75 cents at $4.82 ¼ a bushel.
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