UPDATE 2-Soy supplies seen tighter due to processor demand, dry weather – USDA

U.S. soybean supplies will be smaller than previously forecast due to rising demand from domestic processors, the U.S. Agriculture Department said on Thursday.

The government also lowered its forecast for global stockpiles of soybeans due to a reduced crop in Argentina following a months-long dry spell in that key export country.

But the cuts were smaller than market expectations and soybean futures quickly retreated from the session highs they hit shortly before the report was released.

U.S. soybean ending stocks for the 2020/21 marketing year were seen at 175 million bushels, the lowest in seven years, reflecting a 15 million-bushel increase to demand from processors, USDA said in its monthly World Agricultural Supply and Demand Estimates (WASDE) report.

“The market might be just a little disappointed, with people maybe looking for a smaller soybean number,” said Craig Turner, senior ag broker at Daniels Trading. “But at the end of the day, the trade is looking at exports – and this report sets us up for a very big January WASDE report.”

The world soybean stocks view was cut to 85.64 million tonnes from 86.52 million tonnes. USDA dropped its harvest outlook for Argentina by 1 million tonnes to 50.00 million tonnes. It left its outlook for harvest in Brazil, the world’s biggest soybean producer, unchanged at 133.00 million tonnes despite dry conditions that delayed planting.

Analysts had been expecting the report to show U.S. soybean stocks of 168 million bushels and world soybean stocks of 85.11 million tonnes, based on the average of estimates given in a Reuters poll.

USDA also trimmed its outlook for U.S. wheat stocks by 15 million bushels to 862 million bushels due to rising export and falling import projections. It left its corn stocks forecast unchanged at 1.702 billion bushels, which would be a seven-year low.

Reuters

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