U.S. Soybean Inventories to Shrink as Export Demand Climbs

(Businessweek) – U.S. soybean inventories before the next harvest will be 9.1 less than forecast a month earlier as smaller crops in South America boost export demand, the government said. Futures in Chicago were forecast to open higher.

Supplies will total 250 million bushels (6.81 million metric tons) by Aug. 31, the end of the marketing year, down from 275 million projected in March, the U.S. Department of Agriculture said today in a report. The average estimate of 32 analysts surveyed by Bloomberg was 242 million bushels. Combined output in Brazil and Argentina will fall 3.5 percent this year to 111 million tons, the USDA said.

“The large decline in South American production has allowed U.S. soybeans to be competitive,” boosting the pace of exports, Dan Cekander, the director of grain research at Newedge USA LLC, said in a report on April 5.

On the Chicago Board of Trade, futures may advance 8 cents to 10 cents a bushel at the 9:30 a.m. opening on the supply data, Mark Schultz, the chief analyst at Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview. The contract for May delivery rose 0.7 percent to $14.41 at 7:14 a.m.. The commodity has gained 19 percent this year.

Smaller inventories may boost prices for a range of products including livestock feed, a key expense for meat producers such as Tyson Foods Inc. (TSN) (TSN) and Smithfield Foods Inc. (SFD) (SFD)

Exports Increase

U.S. soybean production in 2011 was 3.056 billion bushels, unchanged from last month’s estimate, the USDA said. The USDA raised its projection for U.S. exports in the current marketing year to 1.29 billion bushels from 1.275 billion in March. That compares with 1.501 billion shipped in the previous year.

World soybean production will total 240.15 million tons, down from 245.07 million tons forecast a month ago, the USDA said. That’s a drop from last year’s production of 264.22 million tons.

Brazil’s crop will be 66 million tons, down from 68.5 million projected in March and less than the 75.5 million harvested a year ago, the USDA said.

Argentina’s (US38PRAR) production was estimated at 45 million tons, down from 46.5 million forecast in March and less than last year’s harvest of 49 million tons.

Brazil’s exports will reach 35.7 million tons, down from 36.9 million forecast in March and 29.95 million a year earlier, according to the report. Argentina, the biggest shipper of soy-based cooking oil and animal feed, will export 8.6 million tons of soybeans, down from 8.9 million forecast last month and 9.21 million a year ago.

World inventories on Sept. 30 will be 55.52 million tons, down from 57.3 million forecast in March and down from a record 69.12 million a year earlier, the USDA said. The average estimate of 19 analysts surveyed was for 55.34 million tons.

Soybeans are the second-biggest U.S. crop, with a 2011 value of $35.8 billion, behind corn at $76.5 billion, government figures show.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net.

To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net