CHICAGO, Nov 10, 2008 (Dow Jones Commodities News via Comtex) -- U.S. corn exports will face tough competition from ample world wheat supplies, but demand for U.S. soybeans should stave off any price slumps in that market, analysts said following new government crop data released Monday.
Issued less than a week after the U.S. Department of Agriculture revised its October crop production report, the November report offered "very little new information," said Gavin Maguire, an EHedger analyst in a post-report conference call sponsored by the CME Group.
The USDA slightly cut corn and soybean production estimates.
Corn export forecasts were "less-than-desired and there is world wheat feed competition; there's plenty of wheat around in world," said Jack Scoville of Price Futures Group. "Wheat prices will struggle to do much very interesting."
The USDA expects farmers to harvest 12.020 billion bushels of corn on a yield of 153.8 bushels per acre. This undercuts the October USDA estimate of 12.033 billion on a 153.9 bushel-per-acre yield. Monday's data also fell below the average trade estimate of 12.066 billion bushels on a 154.3-bushel-per-acre yield.
Output for 2007 was 13.074 billion.
U.S. export estimates were cut 50 million bushels to 1.900 billion from the October report.
The USDA estimated the U.S. soybean crop at 2.921 billion bushels on a 39.3 bushel/acre yield. This is greater than the average trade estimate of 2.916 billion bushels on a 39.2 bushel/acre yield. But the USDA estimates was down from the October forecast of 2.938 billion bushels and yield of 39.5 bushels/acre. Output for 2007 was 2.676 billion and the average yield was 41.7.
"Production is slightly friendly; ending stocks are not," Scoville said.
Ending stocks for the 2008-09corn marketing year were pegged at 1.124 billion bushels, below the 1.160-billion-bushel trade estimate and above than 1.088 billion October estimate.
The ending stocks forecast for the 2008-09 soybean marketing year was 205 million bushels, above the 189 million-bushel-average trade estimate and equal to the October figure.
The ending stocks forecast for the 2008-09 wheat marketing year was 603 million bushels, above the 594 million-bushel-average trade estimate and the USDA's 601-million-bushel October figure.
"I feel that strength will be sold into," Maguire said, for corn and soybeans. "We're in a range where we'll test upper limits near recent highs and encounter pretty decent selling pressure."
If any market will press higher into the new year, it will be soybeans, he said, noting U.S. farmers will be closely watching Brazil's weather to watch for problems that could signal the need for greater plantings.
Maguire also said he thought the economics of winter wheat-soybean planting was more attractive than corn.
"I think we're trying to put a seasonal bottom in now for corn," Scoville said, marking his bearish range low around $3.75 or $3.50, even though he'd heard lower.
When planting season rolls around Scoville said he thinks corn could head to $5.
"Beans are probably the leader to the upside," he said, saying he could see them "with good luck" rising back to $11.50-11.75 areas. "I think we're at lower end of bean trading range for now. Wheat, once again we're at the lower end of the trading range."
Maguire added that soft red winter wheat has "the most downside room; some of better classes can hold in a bit more strongly."
While Argentina's projected wheat output was cut in Monday's report by 1 million metric tons to 11 million, the world's overall production rose.
Regarding soybean yield estimates, Scoville said the USDA should "have a pretty good handle, but yields have been pretty uneven, at least to reports I've been hearing, and uneven reports leads to uneven data calculations."
-By Rebecca Townsend, Dow Jones Newswires; 312-750-4118; rebecca.townsend@dowjones.com
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