Federal forecasters in a report Thursday are expected to lower projections for the upcoming soybean crop, while projecting comfortable inventories ahead of the fall harvest.
The U.S. Department of Agriculture is scheduled to release its latest forecast for crop production, inventories and demand Thursday at 8:30 a.m. EDT (1230 GMT).
The consensus of industry analysts is the agency will trim the yield and production outlook for the soybean crop from its July forecast.
On average, 23 analysts in a Dow Jones Newswires survey projected a U.S. crop of 3.174 billion bushels with a yield of 42.8 bushels an acre. That would be a 1.6% cut from the July production estimate of 3.225 billion bushels and 1.4% below last month's yield estimate of 43.4 bushel an acre.
Analysts' estimates ranged from 3.119 billion to 3.225 billion bushels for production and 42.0 bushels to 43.4 bushels an acre for yields.
A cut is likely because of the excessive heat the soy crop faced last month, said Rich Nelson, director of research for brokerage and advisory firm Allendale Inc.
Another factor that's likely to fuel a cut in yield and production estimates is the potential for a drop in both acres planted and the number that can be harvested. Floods along the Missouri River and heavy spring rains in the northern Plains kept farmers out of the fields and swamped land that already was planted, said Dale Durchholz, analyst with Agrivisor, an agricultural advisory firm in Bloomington, Ill.
The August report is the first 2011 crop estimate based on field surveys, yet analysts say the output and yield estimates easily can change as the survey is based on conditions as of Aug. 1. That leaves room for significant yield changes as the crop moves through the critical August pod-filling stage of development.
"Based on weather in early August, you have to give the crop the benefit of the doubt," said Don Roose, president of Iowa based advisory firm U.S. Commodities.
"Soybean yields can be greatly aided by August weather and it's premature to dial in yield losses at this point," he added, expecting the USDA to hold steady its forecasts come Thursday.
As for the current crop year, analysts on average predicted the USDA will peg soybean inventories at 223 million bushels as of August 31, up 23 million from the July forecast. The estimates ranged between 200 million and 235 million bushels. Twelve analysts were surveyed.
Poor margins for soybean processors and slower exports have trimmed demand, leading USDA forecasters to increase the supply forecast, Roose said.
The increase in supplies ahead of the upcoming harvest could help mute the effect of a potential decline in new soy crop production, according to a market note from Newedge LLC.
As for the end of the next crop year, the average of 20 analysts' estimates pegged inventories as of end of August 2012 at 172 million bushels, down from the July forecast of 175 million bushels. The estimates ranged from 110 million to 222 million bushels, reflecting uncertainty about 2011 production.