For soybeans, the ongoing effects of drought in South America remain at the fore. Analysts expect USDA to cut its soybean production estimates for Brazil, Argentina and possibly Paraguay.
As a consequence, the trade also expects USDA to lower its forecast of U.S. 2011/12 soybean ending stocks because the crop losses in South America should steer more export demand to the United States.
USDA in March pegged Brazil's soybean harvest at 68.5 million tonnes, but a report released Wednesday from USDA's attache in Brazil estimated the crop at 66 million tonnes. Attache reports are not official data but can signal moves the USDA might make in its next official forecasts.
The average Brazil soy crop estimate among 14 analysts surveyed by Reuters was 67.1 million tonnes.
USDA currently forecasts Brazil will be the world's biggest soybean exporter in the 2011/12 marketing year, with the United States and Argentina taking the No. 2 and 3 slots.
"There are no bean offers (for export) out of Argentina -- none for any slot. In Brazil, there are still offers, but they have sold so much into the export market that the crusher is getting concerned about the supplies left over," said Roy Huckabay with the Linn Group, a Chicago brokerage.
Along with increased U.S. exports, some analysts expect USDA to raise its estimate of the 2011/12 domestic soybean crush, currently forecast at 1.615 billion bushels. Soy crushers process soybeans into soyoil, which is used in foods and biodiesel fuel, and soymeal, used in livestock feed.
Bill Nelson of Doane Agricultural Services in St. Louis said a larger-than-expected U.S. crush figure reported by the National Oilseed Processors Association in mid-March laid the foundation for larger crush forecasts.
"It's indicative of stronger demand," he said of the monthly soy crush, which NOPA reported at 136.35 million bushels versus trade expectations for 134.5 million.
However, Nelson said soymeal prices have rallied sharply since the NOPA report and could hurt demand down the road.
