Last week’s NOPA report implied no slowing in the soybean crush pace for May. The NOPA crush of 3.9 million tonnes extrapolates to a Census crush of about 4.08 tonnes. The 2006-07 crush could very well surpass USDA’s estimate of 48.2 million tonnes if the crush and soybean meal exports are as strong as they were in July and August of last year. Soybean meal exports have the potential to pick up from the disappointing pace of recent weeks given the record large outstanding export sales.

NOPA soybean oil stocks increased 9,980 tonnes from the previous month. Such large stocks have failed to undermine soybean oil futures that are preemptively taking the profitability out of biodiesel production before stocks have a chance to decline.

Palm oil prices appear to have risen enough to significantly slow down export demand this month as shipments for the first half of June dropped 21 percent from May. After setting a new record in late May, futures on the Malaysian exchange continued to climb before declining by a combined 12 percent over two trading sessions (June 8 and 11). The setback was sparked by heavy speculative selling after the June 8 announcement that the Indonesian government would delay its decision over whether to raise the export tax on palm oil until the end of June. The market was down again June 11 after the Malaysian Palm Oil Board released May data showing a smaller-than-expected decline in stocks due to a slowdown in domestic use. Domestic consumption was strong through the first half of the marketing year largely due to expanding biodiesel production. However, domestic use was subdued in April and May as high prices have taken the profitability out of using palm oil for biodiesel and other energy uses.

Grain and soybean usage is expected to be record large at 572 million tonnes during 2007-08, which will exceed the 2007 harvest of 539 million tonnes. Despite crop production being record large across nearly all regions, it will be needed to fulfill regional consumption demand. The Lower Mississippi will see its net in-shipment volumes drop from 60.4 million projected to 2006-07 to 50.3 million for 2007-08. The Upper Mississippi region will produce a record crop, but will experience phenomenal demand leaving less grain out-shipments, down 6.4 million tonnes to 54 – something not seen since 1999-00. To a certain degree the pace of shipments between the Lower Mississippi and Upper Mississippi offsets one another.

The Ohio, Indian, Michigan and Kentucky region will see its net out-shipment level shrink 5.1 million tonnes to 34.7 million for 2007-08. The Pacific Northwest will see a similar drop for in-shipments, down 5 million to 21 million tonnes for lower exports and higher production. The Northern Plains will have 1.5 million less tonnes to ship out during 2007-08 at 49.6 million. The Southwest continues to be a growing destination market, supporting long haul rail service with its net deficit position increasing 800 thousand tonnes to 18.3 million.

Meanwhile, soybean grain barge movements since September 1 last year have totaled 26.9 million tonnes, up 6 percent from last year but 24 percent below the five-year average. Movements are poised to turn higher as farmers clear out storage. Historically movements total about 1 million tonnes moving down-bound through the key locks over the next few weeks. Barge volumes are presently averaging about 750,000 tonnes.

A high-level meeting aimed at salvaging global trade talks collapsed last week when the United States and the EU fell out with India and Brazil over plans to cut agricultural subsidies and tariffs. In particular, the two accused Brazil and India of backtracking in the Doha talks on non-agricultural market access (NAMA) saying they were demanding additional concessions from the United States and the EU in exchange for cuts in developing country industrial tariffs that would not lead to any new market access gains for exporters.

Brazil and India for their part said the “exchange rate” the United States and the EU were asking for – deep cuts in developing country industrial tariffs in return for minimal reductions in rich country farm tariffs and subsidies – went against the Doha development mandate and was detrimental to their economies.

The Bureau of National Affairs (BNA) reports that House Agriculture Committee Chairman Collin Peterson (D-Minn.) says he does not intend to offer changes in farm program payment the limits during upcoming farm bill deliberations. “I’m not doing anything on payment limits in the full committee,” Peterson said.

BNA notes that Peterson originally sought to have farm subsidies distributed only to individual farmers instead of co-operatives, which would mean wealthy farmers would hit payment limit caps sooner. That provision died earlier this week when a panel subcommittee approved a simple extension of the 2002 farm bill.

Meanwhile, Peterson said farm bill budget issues have not been resolved. Stung by Republican pressure to release details on where budget offsets are going to come from in using any of the $20 billion reserve funding beyond the Congressional Budget Office (CBO) baseline, Peterson said it was “disingenuous to be issuing press releases on the budget situation.” He said some budget offsets have been found “within our own jurisdiction,” and “we will move ahead.”

Separately, BNA reports that Senate Agriculture Committee Chairman Tom Harkin (D-Iowa) says he expects to unveil his farm bill mark after the July Fourth recess; later than expected, due to baseline issues with the Congressional Budget Office.

The soy complex was lower on June 21 reflecting pressure from heavy fund selling. In the products, speculative selling was more prevalent in meal as the oil share rebounded amid stable petroleum palm and energy markets.July bean futures closed down $7.53, finishing at $3300.74; August was $7.99 lower, closing at $303.50; and September was down $7.72, ending at $307.17. July meal was down $7.72 closing at $249.34; August was $7.61 lower, finishing at $251.54; and September lost $8.05 to close at $253.97. July oil closed $5.95 lower to finish at $772.49; August was down $6.61, closing at $778.44; and September lost $6.17, ending at $785.28.

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