USDA’s National Agricultural Statistics Service estimates a 2005 U.S. soybean crop of 3.043 million bushels, reflecting a record large average yield, was a little larger than expected.

The U.S. average yield forecast of 42.7 bushels is 1.1 bushels above the October forecast and 0.5 bushels above the previous record yield of 2004. The yield is about 1.9 bushels higher than projected by the crop condition ratings at the end of the year.

In addition to increasing the forecast size of the 2005 harvest, USDA reduced the forecast of 2005-06 marketing year consumption by 13 million bushels. USDA projects marketing year U.S. exports at 1.075 billion bushels, 40 million below the October projection and 28 million below the record exports of a year ago. The month-over-month decline in the export projection reflects the slow start to the 2005-06 marketing year U.S. export program as pointed out two weeks ago.

Soybean prices moved higher on Nov. 11 with cash prices approaching the pre-harvest levels as basis continued to strengthen in many markets.

“Based on the U.S. average farm price, the market is currently reflecting a 2005-06 marketing year average farm price of about $5.80, says Darrel Good, University of Illinois Extension economist. “ That price is $.06 above the average price received in 2004-05 when year ending stocks were about 100 million bushels less than projected for this year.”

Overall, USDA projects the marketing year average price in a range of $4.95 to $5.75 and our composite model correlating the year ending stocks-to-use ratio to price projects a marketing year average near $5.25.

He contends that the soybean market appears to be a little over-priced based on current U.S. and world supply, consumption, and stocks forecasts, particularly if U.S. soybean acreage increases in 2006.