Soybean planting got off to a slow start this year, but caught up with the 5-year average progress during the week ending May 13 and raced ahead of normal during the week ending May 20 to match the fastest planting pace of the past 5 years. In USDA’s most recent Crop Progress report that reflected activity through May 20, soybean planting in the Eastern Corn Belt was an impressive 25 percentage points ahead of the 5-year average and was a more modest 5 percentage points ahead of average in the Western Corn Belt. Areas where planting lagged were in the Western Corn Belt states of Missouri, South Dakota, Nebraska and Kansas where excessive rains have delayed planting in some areas. While localized areas may be experiencing protracted delays, the most delayed state was Kansas where 25 percent of the soybean crop had been planted, which was just 11 percentage points below the 5-year average.

With soybean prices rallying considerably more than corn in recent weeks, 2008 futures prices imply a less favorable economic environment for corn production relative to soybeans than what existed ahead of 2007 plantings. The net return advantage for corn over soybeans going into this planting season was unprecedented. While the net returns signaled for 2008 corn planting as of May 24 futures prices was $25 per acre higher than what existed for 2007, 2008 soybean net returns at current futures prices are $58 per acre higher than prevailed ahead of 2007 plantings.

This shift in the relative production economics of corn and soybeans suggests that there should be some recovery in U.S. soybean planted area from this year’s sharp drop. Prospects for larger 2008 U.S. soybean plantings combined with record or near-record U.S. old- and new-crop carryouts lessen the importance of an increase in Brazil’s soybean area.

Cuba last week agreed to buy $118 million in U.S. food products ranging from soybeans to pork and even Spam. Cuba also said it was negotiating deals that could bring the total to nearly $150 million. The Associated Press notes that while Washington’s 45-year-old embargo remains, U.S. food and agricultural products can be sold directly to Cuba under a law passed by Congress in 2000. Since 2001, Havana says it has spent more than $2.2 billion on American farm products and related costs.

Cuba expects this year to match the $570 million it spent in 2006 on American food and agricultural products, including shipping and banking costs.

With Congress coming out of recess, House Agriculture subcommittees will begin plunging into the next round of farm bill markups this week. The actual amount of money that will be available to legislators remains undetermined at this time, but House Agriculture Committee Chairman Collin Peterson (D-Minn.) says he is getting closer to tapping the $20 billion reserve fund that was set aside for farm bill spending. However, Peterson has offered no details regarding how much of the reserve fund he planned to use, where he intended to apply the new spending and, most importantly, how any increased spending would offset.

Peterson did say he has no plans to apply any of the reserve funds to the commodity title of the farm bill. “If we are to have reforms in the commodity title, then there will be changes in the way the money is allocated within the title,” Peterson said. That sets up what could be a lively commodity title markup session at both the subcommittee and full committee levels as well as possibly on the House floor.

It is clear that Peterson heard complaints from his members on the reserve fund, and he acknowledged that he may have been too stingy prior to the subcommittee markups. “It was my fault,” he said. “If we had this meeting last week, those amendments may have been accepted.”

Over on the Senate side, Agriculture Committee Chairman Tom Harkin (D-Iowa) said that unlike Peterson, he intends to tap the entire $20 billion reserve fund. “With the entire $20 billion, we can take care of everything,” Harkin said. “If we don’t get that, then we’ll have to throw some stuff overboard. We’ll see how much people want to throw overboard.”

As for the timing of farm bill process, Peterson says he remains confident that subcommittees will complete their markups during the first two weeks of June. His plan is then to take a week to consider the farm bill package as a whole document before plunging into a full committee markup. The goal is to complete the committee’s work before the July 4 congressional recess, thus leaving the panel on track to have the bill considered and passed by the full House before the August recess.

University of Nebraska scientists have developed a way to give broadleaf crops like soybeans the ability to resist the herbicide dicamba. According to the EPA, dicamba is a selective benzoic acid herbicide registered for the control of certain broadleaf weeds and woody plants. The chemical kills plants by causing rapid, uncontrolled cell growth.

The Bureau of National Affairs reports that the scientists say that dicamba-based herbicides, sold under trade names such as Banvil and Clarity, are relatively inexpensive and environmentally benign because they disappear quickly in plants and soil. However, they said that dicamba also kills broadleaf crops. As a result, its use has been limited to corn and other grassy crops.

The soy complex was mixed on May 31 reflecting a lack of speculative buying, compared with gains in the corn and wheat pits where speculators were active buyers. Soymeal futures were mixed as soyoil tried to follow palm oil futures to new highs, but seemed thwarted by negligible gains in petroleum product futures that resulted in poor biodiesel margins. Underlying fundamentals remain burdensome for both the 2006-07 and 2007-08 marketing years. The outlook fro Brazil is slightly more optimistic given the strength of the Brazilian real, but that will have more of an impact on 2008-09 U.S. export prospects rather than 2007-08 and could leave the 2007-08 U.S. carryout quite large even if South American production falls short of expectations.July bean futures closed down $0.73, finishing at $296.24; August was $0.83 lower, closing at $298.91; and September was down $1.19, ending at $301.30. July meal was up $0.11 closing at $239.09; August was $0.33 higher, finishing at $241.51; and September lost $0.11 to close at $243.39. July oil closed $3.31 higher to finish at $787.26; August was up $3.53, closing at $793.22; and September gained $1.98, ending at $797.40.

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