By Ros Krasny


CHICAGO (B)--The U.S. Department of Agriculture's crop report Aug. 11 was termed slightly bearish for wheat futures, with winter wheat production down from May but not as low as expected.

By contrast, traders said a cut to projected corn ending stocks was a bullish surprise that could lift futures on the day's opening. The soybean report was essentially neutral, with U.S. ending stocks and South American production unchanged.

At 1.622 billion bushels, winter wheat production was above the average trade guess of 1.591 billion and down from 1.649 billion in May.

USDA raised the soft red winter wheat and the winter white wheat crops slightly, and lowered the hard red winter wheat crop by 32 million bushels: not as steep of a decline as many expected.

Even so, traders and analysts rationalized that, if the significant decline in HRW weekly crop ratings is a true reflection of crop prospects, subsequent reports will lower the production estimate further.

USDA's U.S. and world wheat balance sheets were a mixed bag. World wheat ending stocks were lowered further, to 106.25 million tonnes from 109.44 million in May, and are now down 15.6% year-on-year and at the lowest level since 1995-96.

"But people have been expecting 105 million tonnes" for wheat carryout, suggesting the figure is already in the market, said Nathan Tross, soy product options trader.

Analysts said the continued decline in projected global wheat stocks created the chance for a significant wheat rally later in the year, once the Northern Hemisphere harvest is digested.

China's wheat crop was lowered by 3 million tonnes Friday, to 104 million, and China remains the biggest wild card for the 2000-01 global wheat market, traders said.

In corn, USDA surprised many traders by trimming ending stocks for 1999-2000 and 2000-01. Most had expected the government to hold its forecasts in place for another month.

Corn feed usage for the old crop year was raised by 25 million bushels to 5.675 billion, while both feed and export demand for 2000-01 projected to be slightly higher.

Exports for 2000-01 are now seen 100 million bushels above old-crop, presumably on the expectation that China will be a less potent force in the export market in the second half of the marketing year.

China overnight sold corn to South Korea for November-December shipment, but the cargoes it is selling at present are thought to be part of the large old-crop stockpile rather than part of a new-crop campaign.

USDA left its 1999-2000 Chinese corn export forecast at 9 million tonnes and new-crop at 6 million.

Analysts say the main question mark still hovering over China's corn exports is the execution of the large program. Shipments need to average more than 1 million tonnes per month through September to reach t he target level.

The next Chinese monthly corn export shipment report, for May, will be issued around June 23. Shipments in April were 530,920 tonnes.

USDA trimmed world corn ending stocks for 2000-01 to 115.79 million tonnes from 119.00 in May. However, that's still represent a small increase from the current 1999-2000 level of 112.31 million.

In soybeans, USDA's changes to the U.S. balance sheet had been well anticipated: exports rose 15 million bushels to 955 million, while the domestic crush was trimmed by a similar amount.

Old-crop soybean exports are now projected to be up a significant 19% from 801 million in 1998-99. New-crop soybean exports, at 980 million, are forecast to be a record high.

Reflecting business that has been well advertised in the soybean market in recent months, USDA raised China's 1999-2000 soybean imports to 7.2 million tonnes from 5.9 million in May. USDA so far has not issued a world soybean balance sheet for 2000-01.

World soybean exports for 1999-2000 are now seen at 44.65 million tonnes, up from 43.30 million in May and 38.48 million a year earlier.

The 1999-2000 marketing year has marked the rise of China as a potent force in the soybean market. Its imports are now only behind the EU-15 as the largest in the world, outpacing Japan at 4.75 million tonnes and holding.

In 1998-99, China imported 3.85 million tonnes of soybeans, and in 1997-98, 2.94 million, USDA figures show.

Analysts say China is focusing more and more on crushing soybeans rather than importing the soy products, especially soyoil.

USDA trimmed China's 1999-2000 soyoil imports to 630,000 tonnes, down 50,000 from May. Imports are down from 950,000 a year earlier, and 1.65 million in 1997-98.

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