The holidays slowed many things down, but the movement of grain and soybeans seems to have slowed even more so. Perhaps the New Year holiday slowed barge loadings due to a long weekend ahead of New Year’s Day. Weekly movements of grains and soybeans by barge are trailing shipment patterns of the previous two years, while well below the five-year average. For the week that ended January 5, volumes through the key locks totaled 400,000 tonnes, 36 percent below average volumes for that week.

The pace of movements will need to increase to fulfill the second largest grain and soybean export program forecast for the Center Gulf. For 2007-08, exports through the Center Gulf are forecast at 69.9 million tonnes. Exports through the Center Gulf were only larger during the 2001-02 grain marketing year.

The Census Bureau reported that soyoil usage in biodiesel production totaled 103,000 tonnes in November, down from a revised 108,000 tonnes in October, while total usage of fats and oils for biodiesel dropped to 155,000 tonnes from 169,000 tonnes. On a daily usage basis, the biodiesel industry’s use of soybean oil declined by only 2 percent from October to November. However, capacity utilization continued to decline, falling to 30 percent as combined usage of all fats and oils dropped by 5 percent on a daily usage basis while biodiesel capacity increased by almost 100 million gallons during the month.

From January through July, soybean oil accounted for 87 percent of U.S. biodiesel production, on average. That share dropped to 75 percent in September and 64 percent in October as the use of other feedstocks was growing, but soybean oil accounted for 66 percent of biodiesel production in November as prices for some alternative feedstocks are becoming too high to make them feasible for use in biodiesel.

The Indonesian government would lower the soybean import duty to lower the domestic price of soybean, Trade Minister Mari Elka Pangestu said on January 14 after meeting with tofu and fermented soybean cake producers in Jakarta. Indonesian importers pay 10 percent soybean import duty. “One concrete move that we can take is to lower the import duty from 10 percent to 5 percent or zero. We will calculate it later,” she said, as some 3,000 soybean product producers, mostly small businesses, staged a rally outside the presidential palace in Jakarta.

They called on the government to stabilize soybean price, which has increased by almost 100 percent in the past year to $600 per tonne due to declining production in the United States, which supplies 80-90 percent of Indonesia’s soybean requirements.

The demonstrators also ceased production 14-16 January to press their demand. Mari has also suggested increasing domestic soybean production. Indonesia’s annual soybean demand is 2 million tonnes while domestic production ranges between 600,000-800,000 tonnes.

Indonesia imported 1.4 million tonnes last year and 1.2 million tonnes in 2006. Agriculture Minister Anton Apriyantono disclosed that the government would also be seeking soybean supply from other soybean producing countries in its efforts to stabilize the commodity’s domestic prices. However, Indonesia wants to accelerate soybean self-sufficiency, an effort that has been made by the government by providing subsidy for soybean seeds in 2007.

Although low prices for local soybeans have impacted upon the subsidy scheme, he said the government would continue with the subsidy this year by providing superior seeds which could yield two to three tonnes per ha.

China’s imports of edible oils leaped last year according to the latest customs data and analysts predict another rise this year. The China Customs Office said soyoil purchases hit 2.8 million tonnes, surging 83 percent from 2006. An analyst with Jilin Grain Centre told The Public Ledger that said soyoil is likely to see the biggest jump in imports again this year. “The 2008 Beijing Olympics will boost domestic soyoil demand this year and soyoil prices will continue to track the rise of international prices, despite an expected recovery of domestic oil crop cultivation,” he said.

An already-extended deadline for the EU to comply with a WTO ruling on the approval of Genetically Modified (GM) crops expired on January 11. Last week, the think-tank International Food and Agricultural Trade Policy Council warned the row over the issue between the U.S. and EU could erupt again according to Commodity News for Tomorrow.

The feedstuff industry and farmers in some EU countries are as worried about the situation where GM imports are being continually delayed and effectively blocked. They face increasingly steep price rises for feed, and ultimately not being able to source it at all. Meanwhile, GM producers are frustrated about being effectively locked out of potentially lucrative European markets.

The soy complex closed mostly lower on January 17. After reaching the teens, soybean futures are showing some signs of tiring amid lower energy prices and recession concerns. However, soybean demand appears to be running at a pace that will draw down U.S. soybean stocks to near minimum levels by the end of the 2007-08 marketing year if these high prices do not slow demand and USDA did not understate the 2007 U.S. soybean crop as USDA December 1 stocks hinted might be the case. The situation looks to be even tighter for 2008-09 because of the difficulty soybeans have had boosting acreage given the strength in corn prices relative to soybeans since mid November and recent strength in spring wheat futures. The situation in Argentina also is a concern as the soybean crop there develops under sub-par conditions. The underlying fundamentals suggest the prices have not risen enough to allow for a tolerable supply and demand balance over the next 18 months. March bean futures closed down $2.20, finishing at $467.01; May lost $2.02, closing at $474.36; and July was down $3.12, ending at $479.68. March meal decreased $2.87 closing at $379.52; May was $3.09 lower, finishing at $386.91; and July meal closed down $3.75 ending at $391.87. March oil increased $3.97 to finish at $1166.45; May was up $7.05, closing at $1183.87; and July was $7.05 higher, closing at $1196.66.

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