The U.S average soybean yield is forecast at 42.6 bushels, about one bushel below the average trade guess.

“The yield forecast of 47 bushels for Illinois was surprisingly low while the forecast of 46 bushels for Iowa was larger than generally expected,” Good said.

“The forecast of the inventory of old crop soybeans at the beginning of the 2013-14 marketing year on Sept. 1 was unchanged from last month’s projection of 125 million bushels. However, the forecast of the domestic crush during the year ending this month was increased by 25 million bushels, the forecast of imports was increased by 10 million bushels, and the forecast of exports was reduced by 15 million bushels.

“With just over three weeks left in the 2012-13 marketing year, it appears that exports will be slightly larger than the revised forecast,” he said.

For the upcoming marketing year, Good said that the forecast of the domestic soybean crush was reduced by 20 million bushels and the forecast of exports was reduced by 65 million bushels.

“The lower export forecast reflects anticipation of loss of market share to Argentina,” Good said. “Year-ending stocks of U.S. soybeans are projected at 220 million bushels, 75 million less than forecast last month. The marketing-year average farm price is projected in a range of $10.35 to $12.35, 60 cents above last month’s projection.

“For soybean oil, the forecast of consumption for biodiesel was increased by 200 million pounds, to a total of 5.7 billion pounds. That compares to expected consumption this year of only 4.6 billion pounds.

“The increase reflects the likely need to increase biodiesel production to meet the Renewable Fuels Standards for 2014, although the preliminary rules for 2014 have not yet been announced by the EPA. The forecast of domestic soybean oil consumption for other purposes was reduced by 200 million pounds,” Good said.

The USDA’s corn and soybean production forecasts will be updated on Sept. 12 and again in October and November. Forecasts of 2013-14 marketing year consumption and average prices will also be updated monthly.

“There seems to be room for the average corn yield forecast to increase if the growing season is not cut short with an early freeze,” Good said. “In addition, the current forecasts of marketing year corn exports and feed and residual use appear generous.

“Corn prices increased in response to today’s reports, but supplies may turn out to be more abundant than currently forecast. While the soybean production forecast may also increase with a full growing season, the current forecasts of consumption may actually understate the domestic demand for soybean oil and perhaps the export demand for soybeans.  

“An era of higher soybean prices in relation to corn prices is still expected,” he said.