CHICAGO, Feb 5 (Reuters) - Stressful
crop weather has eroded soybean production prospects in Argentina and should
prompt the U.S. Department of Agriculture to tighten its forecast of global soy
inventories this week, analysts said.
Domestically, analysts expect USDA
to raise its estimate of the U.S. 2012/13 soybean crush, an adjustment that
should cause a 4.4 percent drop in soybean ending stocks that are already
projected to hit a nine-year low at 135 million bushels by the end of August
2013.
With U.S. supplies so tight, the
trade is counting on South America to replenish world soybean inventories. The
early harvest is under way in parts of Brazil, which the USDA has projected
will surpass the United States as the world's top soy exporter.
However, warm and dry weather has
stressed developing crops in Argentina, the No. 3 soybean supplier after Brazil
and the United States. The dry conditions represent a sharp turnabout for
Argentina, after excessive rains delayed planting in December.
"We are dropping a bit (on
production estimates) from Argentina, both from the later plantings as well as
the slight dryness beginning to show," Allendale Inc. analyst Rich Nelson
said.
The average estimate for Argentina's
2012/13 soybean production among 19 analysts surveyed by Reuters was 53.095
million tonnes, down from USDA's January estimate of 54 million. Estimates
ranged from 51 million to 55.7 million.
A 53 million-tonne soybean crop
would still represent Argentina's second-largest on record, following its
2009/2010 crop that totaled 54.5 million tonnes.
The average analyst estimate for
Brazilian soybean production was 82.645 million tonnes, up slightly from USDA's
January estimate for a record-large crop of 82.5 million tonnes. Estimates
ranged from 80.9 million to 84 million.
Weather in Brazil has been largely
favorable, although excessive rains have slowed the soybean harvest in a few
areas and raised questions about crop quality. Brazil's government, which
previously estimated the crop at 82.7 million tonnes, will update its official
forecast on Thursday.
The expected drop in Argentine
production, coupled with forecasts for a smaller U.S. soybean carry-out, should
lead USDA to tighten its outlook for global soybean stocks at the end of the
2012/13 marketing year.
The average analyst estimate for
world soybean ending stocks was 59.19 million tonnes, down from USDA's January
forecast of 59.46 million.
U.S. SOYBEAN STOCKS SEEN SHRINKING
USDA in January projected U.S.
soybean stocks at the end of the 2012/13 marketing year at 135 million bushels,
the smallest since 2003/04. But several analysts said the government's figure
undercounts usage from domestic soy crushers.
These processors have been earning
historically high margins by aggressively crushing soybeans into soymeal, a
critical source of protein in animal feed, and soyoil, used in foods and
biodiesel fuel.
"The real glaring thing on
their balance sheets, to me, is that it looks like they have underestimated the
crush," said Anne Frick, oilseeds analyst with Jefferies Bache in New
York. She predicted USDA would raise its soy crush estimate and lower soybean
ending stocks to 120 million bushels.
The average analyst estimate of U.S.
2012/13 soybean ending stocks was 129 million bushels.
However, others said robust U.S. soybean
exports are likely to stall in the coming months as the South American harvest
hits the market, keeping ending stocks fairly stable.
"Even though we are ahead on
export pace, USDA could easily make the assumption that we are going export
next to nothing, starting in about three or four weeks," said Jack
Scoville, vice president of the Price Futures Group in Chicago.
