By Jeff Wilson Jan. 12 (Bloomberg) -- The U.S. soybean crop is bigger than the record forecast a month ago, the government said, as plants escaped damage from cold, wet weather late in the growing season. Farmers harvested an estimated 3.361 billion bushels, up 1.3 percent from 3.319 billion projected last month and 13 percent more than the 2.967 billion bushels harvested last year, the U.S. Department of Agriculture said today in a report. The average estimate of 25 analysts surveyed by Bloomberg News was for 3.346 billion bushels. “Record soybean production has been offset by record demand for U.S. supplies” after drought reduced crops last year in Brazil and Argentina, Joe Victor, the director of marketing for Allendale Inc. in McHenry, Illinois, said before the report. “Soybeans are transitioning from a period of shortage to one of surplus.” A bigger crop would reduce feed costs for livestock producers such as Tyson Foods Inc. and Smithfield Foods Inc., while benefiting oilseed processors including Archer Daniels Midland Co. and Bunge Ltd. Soybean futures for March delivery yesterday fell 11.5 cents, or 1.1 percent, to $10.105 a bushel on the Chicago Board of Trade, the fourth straight decline. The price touched $10.0575, the lowest since December 24. The most-active futures have climbed 15 percent from a six-month low on Oct. 5 on record purchases by China, the biggest global consumer. Yield Estimates The average soybean yield is estimated at 44 bushels an acre, up from 43.3 bushels estimated in November. Last year, the yield was 39.7 bushels per acre. Analysts surveyed by Bloomberg expected 43.7 bushels, on average. About 76.4 million acres were harvested, the USDA said, down from 76.6 million forecast last month and more than last ear’s 74.7 million. Soybean inventories after the harvest were 2.7 percent larger than a year earlier, the government said in a separate report, as a cool growing season boosted production. U.S. farmers, processors and warehouses held 2.337 billion bushels of the oilseed on Dec. 1, up from 2.275 billion a year earlier, the USDA said. The average estimate of 15 analysts was for 2.415 billion bushels. Reserve Inventories Reserve supplies before next year’s harvest will total 245 million bushels, down from 255 million forecast last month, the USDA said. Analysts expected inventories of 241 million bushels, on average. The surplus on Aug. 31 of this year was 138 million bushels, the second-smallest since 1977. Overseas demand is projected at 1.375 billion bushels for the marketing year that began Sept. 1, up from December’s forecast of 1.34 billion and from 1.283 billion last year. U.S. processors will convert 1.71 billion bushels of soybeans into animal feed and vegetable oil in the marketing year, up from last month’s estimate of 1.695 billion and up from 1.662 billion in the previous year, the department said. Cash soybean prices will average $9.65 a bushel for the year, up from last month’s estimate of $9.50 while down from $9.97 in the previous year, the USDA said. Prices averaged a record $10.10 in the 2007-2008 marketing year. The USDA said it may release updated acreage, yield, production and inventory estimates for soybeans in March because of late harvests in southeastern states. World soybean production in the crop year that began Oct. 1 will be a record 253.4 million metric tons, up from 250.3 million tons forecast a month ago and up from 210.9 million produced last year, according to the report. Brazil, Argentina The crop forecast for Brazil, the second-largest grower, was raised to 65 million tons, from 63 million last month, while Argentina, the third-biggest producer, was left unchanged at 53 million tons. “With record South America crops expected to be harvested over the next few months, the window of opportunity for U.S. exports is likely to close soon,” Anne Frick, a senior oilseed analyst for Prudential Bache Commodities LLC in New York, said before the report. To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net

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