10/09/04 CEDAR FALLS, Iowa (Dow Jones)--U.S. soybean futures areexpected to open with good gains Friday after the government cut 2004-05production more than expected.However, a record-large U.S. corn crop and as-expected wheat numbersshould keep those markets on the defensive at the start, analysts said ata Chicago Board of Trade press briefing following the U.S. Department ofAgriculture's release of its September crop production and supply anddemand reports."It looks like there's going to be plenty of everything," John Welsh,senior vice president at Peregrine Financial Group, said of the recordcorn and near-record soybean crops."Upside (price) potential will probably be limited, and demoralizationof the participants in the market as the grain complex has declined thisyear may at some point in the near future reach a level of outrightdisgust that would cause the market to rally," he added. "I'm not surewe're there yet."For example, the nearly ideal growing conditions of large crops havepressured Nov beans from a high of $7.89 in May to a low of $5.52 inAugust. Dec corn has plummeted from $3.22 1/4 in May all the way to $2.25in September.Meanwhile, the USDA raised U.S. 2004-05 corn production to 10.961billion bushels with an average yield of 149.4 bushels an acre in theSeptember report, from 10.923 billion bushels and a 148.9 bu/ac yield inthe August data and markedly higher than last year's 10.114 billion-bushelcrop.Corn ending stocks rose by 77 million bushels to a total of 1.209billion bushels, compared to the August estimate of 1.132 billion.The USDA lowered 2004-05 soybean production to 2.836 billion bushelswith an average yield of 38.5 bushels an acre, compared to 2.877 billionand 39.1 bu/ac in the August report.The soybean crush was lowered by 10 million bushels to 1.615 billion,and exports were lowered 30 million bushels to 1.000 billion. Soybeanending stocks were unchanged at 190 million bushels.On wheat, the USDA left 2004-05 all-wheat production unchanged at2.123 billion bushels with an average yield of 42 bushels an acre. Endingstocks were also unchanged at 578 million bushels, while exports were leftat 950 million bushels, the USDA said.After their sharp declines, prices may now begin to find "demandsupport levels," Welsh said, adding that usage and feed demand haveincreased over the same time frame."I still have the suspicion, as everyone does, that the upsidepotential is somewhat limited this year. But if South America doesn'tproduce as much as they did last year, we may get a kick from that.Soybean demand has been wonderful and growing continually but so hasproduction - not only in the United States but all around the world,"Welsh said, highlighting the markets' dilemma this year.The longer term technical picture in corn and soybeans, as well as theglobal increase in demand, may theoretically stabilize prices near currentlevels, he noted.