The House Agriculture Committee last week completed its work on the 2007 farm bill. On July 18, the committee approved the commodity and conservation titles of the bill, and on July 19 completed work on the remaining nine titles. The panel also approved by voice vote the 104-page manager’s en bloc amendment dealing with pay caps and other of Chairman Collin Peterson’s (D-Minn.) priority issues. That amendment now will be sent to the to the House Rules Committee where it will be joined with a proposal by the House Ways & Means Committee that would provide offsets for approximately $4 billion in additional spending for nutrition programs.

The en bloc amendment also includes language banning anyone whose three year adjusted gross income exceeds $1 million from receiving farm program and conservation payments. The current cap on farm program payments is $2.5 million, unless 75 percent of the income is derived from agriculture or agriculturally related enterprises. The approved proposal also would eliminate payments to anyone whose AGI ranges from $500,000 to $1 million unless at least two-thirds of that amount is derived from farming.

Peterson says adjusting the income cap in this way would save $226 million over five years. USDA has said the ban those making $1 million or more would save $10 million per year. Agriculture Deputy Secretary Chuck Conner earlier said fewer than 9,600 individuals fall into this income category.

Soybean farmers who were worried that their fixed annual payments might be cut are likely winners with this bill. Those payments are about the only type of crop subsidies that farmers are expected to get for the foreseeable future because of the sharp increases in soybean prices brought on by the surge in demand for biofuels. Although there was talk early on of cutting the fixed payments to fund other programs, the payments are left intact in the legislation.

Peterson and House Speaker Nancy Pelosi (D-Calif.) now are looking for time on the calendar for the whole House to consider the measure. Earlier, there were indications the proposed legislation could move to the House floor as early as July 26. It now appears more likely that the House will begin work on the bill the week of July 30, although other pressing House business could push consideration past the congressional summer recess and into September.

Peterson says he has a general commitment from Democratic leaders for floor time the week of July 30, just before the August recess. “It’s going to be on the floor, unless something blows up. And it will take about a day,” Peterson said. However, Pelosi said: “So much is on the table. I would hope to work on the farm bill. But we’ll still have to see how the schedule works out.”

Biodiesel producers, marketers and soybean farmers have formed their own organization, separate from ethanol producers. The Iowa Biodiesel Board will be funded by soybean check-off money collected by the Iowa Soybean Association and by membership dues, said Randy Olson, executive director of the organization. Olson, who was senior marketing manager at the Iowa Soybean Association, said the board was created by demand from “the entire biodiesel chain” to promote biodiesel and work on industry issues and policies.

Iowa has 13 biodiesel plants in production with a capacity to produce 258.5 million gallons of biodiesel a year and three more under construction with a potential capacity of 95 million gallons.

Southeast Asia may become a prime import market for soymeal. Indian exports of soymeal are likely to fall to around 3.5 million tonnes in the crop year ending in September from 4.1m tonnes in the year to September 2006, according to Rajesh Agrawal of the Indian Soybean Processors’ Association. The high figures for the previous year are mainly because the country had large carryover stocks then.

“Right now, Southeast Asian countries have low stocks, whether it be Taiwan, Thailand or Indonesia,” Agrawal said. “The business will continue and there is no problem right now in the exporting of soymeal.” Soybean availability was tightening in those domestic markets as the current season draws to a close, he said.

Malaysian crude palm oil (CPO) prices are getting so high that producers are seeing buyers switch to other oils. Malaysia’s Plantation Industries and Commodities Minister Peter Chin said last week, “Once the prices of CPO and palm olein are too high, there is a tendency for consumers to switch to other oils that are less expensive,” he said.

In the past CPO prices were typically lower than those of other oils. “But now the gap is closing. Because of that, there are cases of people switching to their traditional oils in Europe,” he added, pointing out that there has been a slight decrease in CPO exports to the EU.

In related news, Indonesia may have produced less palm oil than expected in the first half of the year after a drought in 2006 hindered the crop’s growth. Derom Bangun, president of the Indonesian Palm Oil Association, said palm oil production appeared not to be on course to produce the previously estimated 17.2 million to 17.4 million tonnes this year and is contributing to current high prices.

The soy complex was mostly higher on July 12 with gains for the products equally distributed between soymeal and oil as higher energy prices provided support for soyoil. The most important weather for determining soybean yields lies ahead. While U.S. production prospects have been the main influence on the soybean market, South America production remains a longer-term market factor. The eventual outcome of the U.S. soybean crop and the 2007-08 export outlook will have a lot to say about how much South American production is needed next year and how much South American area the market will try to buy this fall. August bean futures closed up $1.75, finishing at $314.52; September was $1.75 higher, closing at $317.14; and November was up $2.02, ending at $324.08. August meal increased $0.99 closing at $250.77; September was $0.99 higher, finishing at $254.19; and October gained $3.09 to close at $256.95. August oil closed $2.87 higher to finish at $829.59; September was up $3.09, closing at $836.43; and October gained $2.43, ending at $842.16.

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