USDA released its quarterly U.S grain stocks estimates for September 1, 2007 and its annual small grains production wrap-up last week. Soybean stocks were greater than expected at 15.6 million tonnes versus the market calculation of 14.5 million tonnes. That extra 544,000 tonnes will not do much to dent the expected significant drawdown in U.S. soybean stocks through the season ahead. The U.S. crop size in October’s round of estimates, and the South American planting and growing season will quickly dominate trader attention again.

The Census Bureau reported that the soybean crush in August totaled 3.98 million tonnes. The figure was slightly above the average survey estimate of 3.95 million tonnes. August’s figure is down from July’s 4.09 million tonnes but above last year’s 3.86 million tonnes. Soyoil stocks slipped to 1.36 million tonnes from July’s 1.45 million tonnes. The average of survey estimates was 1.45 million tonnes. Soymeal stocks were reported at 213,000 tonnes. The stock figure was down from July’s 286,000 tonnes and below the average estimate of 261,000 tonnes.

Odds are rising that the Senate Ag Committee could finally markup its version of the farm bill this week. Senate Finance Chairman Max Baucus (D-Mont.) already has indicated he wants his panel to markup the tax-related items and budget offsets his panel will provide relative to the farm bill debate.

Senate Ag Committee Chairman Tom Harkin (D-Iowa) and Budget Committee Chairman and Agriculture Committee member Sen. Ken Conrad (D-N.D.) have been trying to broker an agreement on different viewpoints for the farm bill. They appear to have made at least some progress, with Democrats on the panel holding several meetings last week.

Harkin said he has met with members of the Ag panel and said: “I hope we will have something soon. I haven’t given up on that. We still have no assurance of funding coming from outside the [Ag] Committee. There is a willingness to find funding within the bill, but whether or not that is enough to do what we want to do, we don’t know.”

Asked if he was still planning for a markup prior to the Columbus Day break which will see the Senate out of action Oct. 8-12, Harkin said, “I’m very hopeful we can still bring it up before Columbus Day. If we don’t have a sufficient number of lawmakers on board, then we may have to go beyond that.”

One option still “alive” is to reduce direct payments to producers if prices remain above a specified level, according to Harkin. “What I proposed,” Harkin said, is that “corn, bean and wheat farmers would be better off if prices fell than under the present system. The only nick they would have is if prices were to be high. Then they’d have to give up a little bit” via a reduction in the direct payment. Some congressional sources inform that another possibility would be a 12% across-the-board reduction in direct payments.

The Senate last week approved a conference report reauthorizing the Water Resources Development Act (WRDA) by an 81-12 vote that was more than the two-thirds needed to overcome a threatened presidential veto. The House on Aug. 1 passed the conference report by a veto-proof margin of 381-40. The measure now goes to President Bush for his signature. While President Bush and the Office of Management and Budget (OMB) said the measure is way too costly by authorizing (but not yet appropriating) $23 billion in water projects and studies, supporters say the cost of the conference report is high due to the backlog of projects since WRDA was last updated in 2000. WRDA is supposed to be reauthorized every other year, but lawmakers have struggled through arguments over cost, individual projects and how to change the way projects are reviewed.

The bill would authorize funding for more than 900 projects and several studies by the Army Corps of Engineers on flood control, navigation and environmental restoration. The legislation also would set up a new independent review process for projects costing $45 million or more. The review panels would be set up by the National Academy of Sciences or a similar organization. Reviews also would take place if the governor of an affected state requested one or if the chief of engineers deemed a project controversial.

Other major projects in the bill include new locks, dams and environmental restoration projects on the upper Mississippi River and Illinois Waterway system. The bill also would authorize the first projects under a sweeping restoration plan for the Everglades. The new locks, estimated to cost $1.8 billion, would be 1,200 feet (365 meters) long. An additional $1.8 billion would be spent on ecosystem restoration. New locks would be built on the Mississippi at Lock and Dam 20 at Canton, Illinois, 21 at Quincy, Illinois, 22 at Saverton, Missouri, 24 at Clarksville, Missouri, 25 at Winfield, Missouri, and on the Illinois River at LaGrange and Peoria, Illinois.

Kentucky Governor Ernie Fletcher signed new biofuel legislation into law. The bill expands the existing biodiesel tax credit of $1 per gallon to renewable diesel and increases the gap on the total tax credit allocated to $5 million in 2008 from the current $1.5 million, and further to $10 million in 2009. To qualify, a biodiesel facility must involve a capital investment of at least $25 million. The bill also creates separate new tax credits of $1 per gallon for ethanol produced from grain and from cellulosic biomass, each capped at $5 million.

The soy complex was up on September 27 rallied sharply again to new contract highs as wheat futures also surged to new contract highs. Speculators were fairly heavy buyers of the soy complex amid a weakening U.S. dollar that makes U.S. imports less expensive and makes it tougher to attract additional soybean area in Brazil. Also concerning Brazil is a lack of rain in the Center West that threatens to delay the very early stages of planting. Despite the improvement in USDA’s condition ratings for the soybean crop, the market does not seem optimistic that the U.S. crop is bigger than USDA’s September forecast given the mixed yield results that have been reported thus far.November bean futures closed up $6.71, finishing at $370.74; January gained $6.98, closing at $376.71; and March was up $6.71, ending at $379.83. October meal increased $4.85 closing at $311.73; December was $4.41 higher, finishing at $318.34; and January meal closed up $4.41 ending at $320.55. October oil closed $15.65 higher to finish at $874.79; December was up $17.86, closing at $889.56; and January gained $16.09, closing at $899.48.

Back to index