Both analysts expressed a bit of a surprise on the USDA’s upside estimate in soybean yields.

“A 350 million bushel carryout is still plenty,” said Basting. “I think now the market will wait to see the harvest results for soybeans and turn attention to South America.”

One key point on beans: the import estimate for China in 2010/2011 was raised another three million tons to 55 million tons. “That’s over two billion bushels of beans, a tremendous amount forecast to be imported by China.”

The Chinese demand appears to have “saved” the soybean numbers from being “quite negative,” said Roggensack. “Fifty-five million tons in imports is a tremendous revision higher – we were at 49.5 million tons last year. We were at 41 million tons imported by China just two years ago.”

Even with the big increase in demand from China, “world ending stocks for soybeans are still pegged at a record high level,” continued Roggensack. “But the USDA is assuming that Argentina and Brazil will produce 8.5 million tons less soybeans in the coming year. We’ve already seen reports out of Brazil (indicating) their planted acreage will go up.”

Roggensack doesn’t expect Argentina’s soybean acreage to go down. “So, the USDA is counting on a pretty big revision down in yields in the coming year for Brazil and Argentina. While (those nations) have some (drought) issues, you’re still counting on lower yields even though the crop isn’t even planted yet.”