U.S. oilseed production for 2006-07 is estimated at 96.9 million tones, up 1.4 million tonnes from last year, according to the latest USDA S&D Report. U.S. soybean production is estimated to be 86.8 million tonnes, while the yield is estimated at 2.87 tonnes per hectare, below last year’s record of 2.89 tonnes per hectare, USDA said. Soybean exports are expected to be 30.5 million tonnes reflecting weaker-than-expected shipments in November and December. U.S. Soybean stocks are projected by USDA to be a record 15.6 million tonnes.

Global oilseed production for 2006-07 is projected by USDA to be a record 395.4 million tonnes. Foreign oilseed production is projected at 298.6 million tonnes and global soybean production is expected to be 226.9 million tonnes.

Biodiesel is poised for takeoff in 2007, Kansas soybean growers were told last week at the annual Kansas Soybean Expo in Topeka, Kansas. “This is the year we will see significant production really taking off,” Rob Joslin, American Soybean Association vice president, told the producers assembled for the event.

Joslin also said he expects Midwestern farmers to come out winners in the 2007 farm bill because the key players in Congress are from Midwestern states, but he expressed concern about funding levels. “The baseline for farm programs could be reduced because this year’s high prices have reduced loan payments and countercyclical payments,” he said.Regardless of farm bill policy, he said, he expects biodiesel to be a significant factor in soybean marketing

The Supply Department of Brazil’s Ministry of Agriculture (CONAB) issued its January production update last week. CONAB estimates soybean area at 20.7 million tonnes, similar to its previous estimate. This represents a 7 percent decline from last season. CONAB forecast soybean production at 54.9 million tonnes, which is 1.5 million tonnes above last year.

Meanwhile, Brazil’s Institute for Geography and Statistics (IBGE) last week also updated its estimate for soybean area, reducing it by 200,000 hectares to 20.3 million hectares from its previous estimate issued in early November. IBGE’s latest soybean area estimate represents an 8 percent reduction from last season.

Other recent are estimates are above IBGE’s including USDA’s. Reports of recent estimates from various private firms in Brazil put soybean area between 20.5 and 21 million hectares.

After months of uncertainty and rumors which rocked Argentina’s agricultural markets, the government yesterday announced its plan to reign in domestic food prices in the face of soaring international commodity prices. Dow Jones Newswires reports that basic food products will be subsidized by a 4 percent increase of the export tax on soybeans and soy sub-products. Export taxes on soybeans will rise to 27.5 percent, while soymeal and soyoil will be taxed at 24 percent. Argentina is the world’s leading exporter of soymeal and soy oil.

The increased taxes will raise some $400 million for the government, which will also contribute $100 million from the treasury to create the subsidy program. Domestic wheat flour producers will receive direct subsidies to lower the cost of bread and pasta, Miceli said. Dairy, pork, poultry and feedlot beef producers will also receive subsidies to compensate for increasing corn feed costs.

Rising soy prices in Brazil are threatening to slow down the government’s ambitious biodiesel and H-Bio program, according to analysis by FO Licht. In January 2008, Brazil will begin its obligatory 2 percent mix of biodiesel in all diesel, which will result in the use of roughly 800 million liters of biodiesel a year. However, soaring prices have led to some biodiesel projects being put on indefinite hold.

By the end of 2007, there will be an estimated 1.7 billion liters of installed industrial capacity for biodiesel production, Miguel Biegai, a consultant with Safras & Mercado told Licht. About 70 percent of that output was expected to come from soyoil. Surging soy prices could also delay government plans to push an obligatory 5 percent mix of biodiesel in all diesel up to 2010 from 2013, said Roberto Ardenghy, the director of the National Petroleum Agency.

According to FO Licht, in Brazil a tonne of soyoil with an inter-state circulation tax of 12 percent was pegged at $799 in Sao Paulo during early December, up about 16% from prices at the end of October, and up 28 percent from prices at the end of September. Once soyoil prices move to more than $600 per tonne, biodiesel will become commercially unviable for Brazilian producers to make, given current average national costs of regular diesel without taxes, according to the Brazilian Vegetable Oils Industry Association (Abiove).

Meanwhile, H-Bio fuel also may run into cost hurdles, according to the FO Licht report. H-Bio is diesel fuel blended with a 5 to 15 percent mix of pure vegetable oils (not esters) such as soy, sunflower, cotton, and castor. Unlike biodiesel, the fuel is blended with these oils at the refinery, not by distributors at the gas station. The new fuel was announced by Petrobras in June 2006 as an innovation that would both boost Brazil’s energy independence and aid the country’s large-scale commercial soy producers a month after the country’s No. 1 soy state of Mato Grosso shut down all soy trade because of abysmal market prices that were lower than the cost of production. However, FO Licht concludes in its analysis that Brazil is not likely to see very much of H-Bio produced in coming years – unless Petrobras decides to absorb the additional costs for reasons other than the bottom line and the country’s soy sector exports less oil in order to save it for increased domestic consumption.

The soy complex closed up on January 11 reflecting large increases in corn prices. January bean futures closed up $3.77, finishing at $243.98; March was $3.49 higher, closing at $247.74; and May gained $3.49 ending at $253.07. January meal was up $2.20, closing at $209.00; March was $2.98 higher, finishing at $214.29; and May increased $2.65 to finish at $218.37. January oil closed $5.73 higher to finish at $616.41; March was up $7.05, closing at $625.22; and May gained $7.72, ending at $636.25.

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