America's soybean stocks may be shown on their way to the lowest in 35 years after US officials later on Wednesday revise crop estimates, with forecasts for corn supplies also cut, analysts believe.
Analysts on average expect the US Department of Agriculture, in its latest Wasde report on world crop estimates, to make only marginal cuts to estimates for domestic inventories at the close of the 2010-11 year.
However, analysts at Country Hedging have estimated that the estimate for domestic soybean inventories will be cut by 27m bushels to 113m bushels, representing the lowest inventories since 1976-77.
The broker added that such a figure, which comes amid resilient US exports of the oilseed, largely to China, may be reached through a number of revisions rather than in one hit on Wednesday.
Corn demand
For corn, Macquarie came in with the lowest estimate for end 2010-11 stocks among brokers polled by Thomson Reuters, forecasting a figure of 663m bushels, 82m bushels below the current USDA forecast.
Macquarie analysts said they were more upbeat than peers over prospects for US corn exports, which in latest weekly data reached a marketing-year high of 1.2m tonnes.
"We expect the corn production losses in Argentina will put more pressure on US export demand, while we also maintain a view that China will purchase corn from the US at some point this spring or early summer," Macquarie said.
Domestic demand for the grain looks firm too, the broker added, noting strong demand from ethanol plants and upbeat comments from meat giant Tyson last week.
"There is very little sign of any livestock producer pullback in production" despite high grain prices.
Global data
Ideas that the USDA will lift assumptions for corn use by ethanol plants were also voiced by other analysts.
Jerry Gidel, at North America Risk Management, said he expected USDA analysts "to tip their hats" to recent record rates of output by ethanol plants, which consume more than one-third of American corn.
However, he added that, with relatively minor changes expected to US crop estimates in the Wasde, investors would also be focused on foreign data, where bigger changes were possible.
For soybeans, better hopes for Brazilian output could see the USDA lift its estimate for global stocks at the end of 2010-11 by 1.2m tonnes to 59.5m tonnes.
"That's only a few days' consumption for China, so I'm not sure that would have shake up the market too much," he said.
