Soybean stocks in America may have shrunk further � not risen � last year, and look set to remain weak, sapped by weakening crop prospects at a time of booming exports.

Most analysts believe that the US Department of Agriculture will, in a benchmark report later on Friday, reduce its estimates for US inventories of the oilseed � both for the 2009-10 crop year, which ended last month, and 2010-11.

However, analysts at Linn Group, research and brokerage firm, believe the cut will be as much as 45m bushels, leaving soybean stocks as of the end of 2009-10 at 125m bushels, a reduction of 13m bushels over the crop year.

And inventories will grow by only 4m bushels in the newly-begun crop year, implying a cut of nearly two-thirds to the USDA estimate, Linn believes.

Sudden death... 

The forecast reflects in part weaker prospects for soybean production, for which the USDA will cuts its estimate by 34m bushels to 3.399bn bushels following dry weather and some reports of sudden death syndrome, Linn believes.

Iowa is the biggest soybean-growing state in America, which is the world's top producing country of the oilseed.

Soaring exports 

However, hopes have also grown for exports after a series of purchases by China late in 2009-10, and with a record order book for 2010-11.

"Solid demand from China this week for soybeans and oil, and ideas that China demand will remain strong into the new crop season, has helped support ideas that both beginning and ending stocks [for 2010-11] will be trimmed for the upcoming report," Terry Roggensack, at Hightower Report, said.

"Strong demand from China has caused stocks to tighten."

Domestic consumption of soymeal, a major animal feed, "also looks to be on the rise", he added, noting a rise in US eggs being set aside for hatching, "which should boost poultry production into the fourth quarter".

'Bearish taste'

Nonetheless, soybean prices have eased in recent days amid some ideas that production may prove stronger than had been feared, with some analysts forecasting that the USDA may increase its estimate for America's soybean harvest.

"Early harvest yields have been at, or better than, expectations leaving a bearish taste in the market's mouth," Kim Rugel, at Benson Quinn Commodities, said.