PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 10:32 UK, 10th Jun 2010, by Agrimoney.com
US 'to cut crop stocks estimates' as exports rise

Key data due later from US farm officials may – in theory - provide a prop to Chicago's falling prices, bringing cuts to stocks estimates for all three major crops, analysts believe.

The US Department of Agriculture is, in its benchmark monthly report on global crops, expected to cut estimates for America's inventories for corn and soybeans at the close of 2009-10, and trim expectations for the newly-started wheat harvest.

Indeed, the estimate for the world wheat harvest is expected to be cut by some 5m-7m tonnes, with a dry spring trimming hopes for France's crop, and poor spring weather holding back spring sowings in the Black Sea and Canada.

"The crops in the EU, Russia, Ukraine, and Canada are all expected to be lowered," US Commodities said.

Kevin Kjorsvik, at rival broker Benson Quinn Commodities, said: "Unlike previous reports not every analyst is looking for a bearish report."

For 2010-11, "domestic and world wheat carryout [inventory] levels have a fair chance to shrink from the previous USDA report".

Fungal threat 

For US wheat, USDA assessments of a well-seated winter crop, with 66% rated in either "good" or "excellent" condition, have not married with some early-harvest reports of modest protein levels, and observations of some disease.

Forecasts for new USDA estimate of  US end 2009-10 stocks (May figure) 

Corn: 1.714bn bushels (1.738bn bushels)

Soybeans: 182m bushels (190m bushels)

Wheat: 946m bushels (950m bushels)

Source: ThomsonReuters poll

"Issues with the soft red winter wheat and hard red winter crop - low plant populations and streak rust – are expected to lead to lower US production," Mr Kjorsvik said.

At Farm Futures, Arlan Suderman said: "Fears are mounting that stripe rust will produce disappointing yields in Kansas and Colorado and points to the north.

"Stripe rust is also creating threats in the Pacific Northwest as well."

Stripe, or streak, rust is a fungal disease capable of causing yield losses of some 25%.

Firm exports 

For corn and soybeans, a firm pace of exports is behind expectations that the estimate for US stocks as of the close of August will be cut by 8m bushels to 182m bushels, with Farm Futures forecasting that the reduction could be as much as 34m bushels.

Forecasts for new USDA estimate of  US end 2010-11 stocks (May figure) 

Corn: 1.806bn bushels (1.818bn bushels)

Soybeans: 355m bushels (365m bushels)

Wheat: 982m bushels (997m bushels)

Source: ThomsonReuters poll

Analysts expect on average that the USDA will trim 4m bushels from its estimate for corn stocks at the close of August, the end of the 2009-10 marketing year, although Citigroup has pencilled in a 15m-bushel reduction.

While the revisions are expected to feed through into weaker figures for inventories of all three crops in a year's time, many analysts believe that the USDA will steer clear of making significant changes ahead of updated sowings data due at the end of this month.

The monthly USDA world crop supply and demand reports are key features of the farm commodities' calendar, with revisions in January's briefing kicking off the bear run in prices which has lasted for the rest of the year.