CBOT soy outlook: USDA crop data to weigh on prices

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U.S. soybean futures are poised for a lower start to Monday's day session, influenced by negative crop-production and yield estimates from the U.S. Department of Agriculture's September crop report.

CBOT soybeans are called to open down 10 cents to 20 cents.

"The higher-than-expected yield, production and end-of-year supplies provide a sigh of relief for bearish traders," said Don Roose, president of Iowa-based brokerage U.S. Commodities.

The U.S. Department of Agriculture projected U.S. 2011 soybean production at 3.085 billion bushels, up 0.9% from August. Based on Sept. 1 conditions, yields are expected to average 41.8 bushels per acre, up 0.4 bushel from last month.

Industry analysts had become increasingly comfortable with yield estimates near 40 bushels per acre leading up to the report, meaning unless yields dropped below this in government forecasts, it would be hard to stage any significant rally from current levels.

Increasing dryness was noted during last month's Midwest crop tours, leaving yields in question ahead of the report, but traders are cautious that the USDA may incorporate reductions in the number of acres affected by flooding or drought reported by the department's Farm Service Agency in the October report.

The influence of external financial markets will continue to affect prices, with analysts concerned about soybean demand holding up in the face of a sluggish world economy.

Traders are also concerned about the potential for a cold snap to hit the northern Midwest later in the week, Roose says. The potential for temperatures to drop to 28 degrees Fahrenheit in northern Iowa and Minnesota will shut down plant growth, an event supportive of prices, he adds.

Meanwhile, the USDA projected 2011-12 soybean ending stocks of 165 million bushels, up 10 million from the August estimate. Analysts on average estimated ending stocks of 152 million bushels. Projected 2011-12 soybean exports were raised by 15 million bushels to 1.415 billion bushels, reflecting slow early-season sales and a projected increase in global import demand, especially for China, the USDA said in the report.

The department said 2010-11 U.S. soybean ending stocks were 225 million bushels, down from its August estimate, and below the average analyst estimate of 230 million bushels.

On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11:00 a.m. EDT and its weekly crop progress report at 4:00 p.m. EDT.

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