* USDA cuts Brazil, Argentina soy for fourth time
* Tighter world soy supply to boost prices
* USDA sees relief for tight US corn stocks
* Corn futures fall, soy and wheat rise-traders
By Charles Abbott
WASHINGTON, April 10 (Reuters) – funA drought in major
soybean producers Brazil and Argentina cut their production more
deeply than expected, the U.S. government said Tuesday in a
report that drove prices to near their highest since 2008.
While a more than 20 percent rally in soybean prices this
year has reignited concerns over food prices, the outlook for
corn supplies appeared upbeat after the Agriculture Department
said end-season stockpiles would be higher than traders
estimated as ranchers use more wheat in livestock rations.
In its regular review of global fundamentals, USDA cut its
forecast of the crop in the South American giants for the fourth
month in a row. It lowered the Brazil crop by 3.6 percent from
March’s estimate and Argentina’s by 3 percent.
Since December, USDA has cut its projection of Brazil’s crop
by 12 percent, and Argentina’s by 13 percent.
Chicago Board of Trade soybean futures gained 0.6
percent to $14.39 per bushel, within 20 cents of their 2011
peak. Corn futures, which drove most of last year’s early
surge in food prices, dipped 0.3 percent, while wheat was
unchanged.
“…Warm temperatures and a lack of rainfall since late
February in the southern state of Rio Grande do Sul further
reduced yield and production prospects,” said USDA. “Argentina
and Paraguay soybean production estimate also are further
reduced this month, reflecting the damaging effects of this
year’s drought.”
Brazil likewise issued a forecast on Tuesday, estimating the
crop at 65.6 million tonnes, down 3.2 million tonnes from its
March forecast. The Agriculture Ministry estimated exports at
31.2 million tonnes, down from 32.4 million tonnes in 2010/11.
Brazil is the world’s largest soybean exporter.
The U.S. corn stockpile will be larger than expected at the
end of this marketing year, said USDA, because wheat will be
used as a substitute and an early harvest to this year’s crop
will cushion the supply in the final weeks of the year.
USDA said corn supplies will drop to 801 million bushels
when the marketing year ends, the same figure it projected in
March and still the lowest total in 16 years. That is 11 percent
larger than expected by traders.
“The USDA is assuming that the high (corn) price that we’ve
seen as a result of last month’s report is going to slow down
the demand,” said Jason Ward, market analyst with Northstar
Commodities. “This will likely depress the market back down and
increase the usage again.”
SOYBEAN CUTS
Some traders were skeptical of USDA’s reasoning. Analyst
Shawn McCambridge of Jefferies Bache said corn usage should be
higher than USDA calculated and added, “We will go right back to
trading the weather.”
“Larger expected supplies and competitive prices for wheat
relative to corn suggest an increase in summer wheat feeding
compared with last year,” said USDA.
“The quick start to corn planting this spring and more
intended acres in the South raise the potential for a
substantial increase in new-crop corn use before the Sept 1
start of the new marketing year,” the agency added.
Growers planted 7 percent of the corn crop as of Monday, far
ahead of the 2 percent average for early April.
USDA kept its ethanol use forecast and export forecast for
corn unchanged from last month.
U.S. soybean exports would gain slightly because of the
smaller crops in South America, said USDA. It forecast overseas
sales of 1.29 billion bushels, up 1 percent from the March
forecast and far below 1.5 billion bushels in the previous
marketing year. Farm-gate prices for U.S. soybeans would be the
highest ever, discouraging some buyers.
Soybean production around the world was forecast for 240
million tonnes, down 2 percent from a month ago mainly due to
drought losses in South America. The global stockpile would be
drawn down by 20 percent throughout 2011/12 marketing year.
(Reporting By Charles Abbott; Editing by John Picinich)
