The Hindu Business Line : US soyabean forecast lowered to 78.3 m tonnes

SUSPENSE over the latest forecast of American soyabean crop size for 2004-05 was unravelled on Thursday when the US Department of Agriculture (USDA) revised the number down to 78.3 million tonnes (mt), from the earlier forecast of a record 80 mt. In 2003, the harvest was 65.8 mt.

Indeed, the revised forecast surprised many players as there was expectation of even an increase in crop size. The first survey-based forecast for the 2004 season indicated yields to be 39.1 bushels per acre resulting in a harvest of 2,877 million bushels versus expectation of production upwards of 2,900 million bushels.

In the short-term the latest forecast is supportive to the soya complex, which is already fighting tight supplies. Long liquidation in the last few weeks in anticipation of a record crop in October had depressed forward prices, despite supply tightness in the spot market.

The Chicago Board of Trade said the oversold technical condition of the market along with the supply shock helped support active buying. In addition, cash levels were firm.

Outside of the US, soyabean production forecast is left unchanged at 144.5 mt.

Despite a reduction in US soyabean crop forecast, global oilseeds output in 2004-05 will still be a record at 378.8 mt, an increase of 42.8 mt from 336 mt of 2003-04. This level of output, if realised (subject to favourable weather) would help augment global supplies and rein-in prices.

Global vegetable oil production from major oilseeds would rise some five per cent next year to 105.5 mt (100.8 mt), while consumption is expected to climb to 104.9 mt from 99.7 mt in 2003-04. Ending stocks for 2004-05 are placed at 6.5 mt, little changed from 6.6 mt this year.World oilmeals production in 2004-05 is forecast at 206.2mt, up from 192.6 mt of the previous year.

Weather from now on will play a crucial role in determining the crop size.

In US, some weather concerns have developed. Early cold weather has begun to move into Midwest. China and India are two other major origins and also major importers whose crop progress has to be watched.

A further reduction in US soyabean crop size will lend volatility to the global vegetable oil market, which has been rather subdued last three months because of the prospect of record world oilseeds output. In 2003, a sharp reduction in US soyabean crop forecast released by USDA in October (despite crop deterioration noted as far back as August and September) sent shock waves across the market.