USDA released its February world and U.S. commodity supply, demand, trade, and price updates on February 8. Changes in 2007-08 season estimates reflect ongoing world crop and trade trends, with no new survey input for U.S. crops and stocks. As usual, USDA did not comment on 2008-09 prospects.

USDA reduced its 2007-08 carryout by 408,000 tonnes to 4.35 million tonnes on reductions in the crush and exports. The ending stocks reduction was a bit more than the market expected, but USDA likely will have to boost its exports and, perhaps, its crush forecasts further given large outstanding export sales for soybeans and products. On the product side, USDA put the additional 2007-08 soybean meal production in soybean meal exports. For soybean oil, USDA cut 2007-08 soybean oil usage in methyl ester (dominantly biodiesel) by 181,000 tonnes and boosted soybean oil exports by 136,000 tonnes, resulting in higher soybean oil ending stocks of 1.13 million tonnes. USDA held Brazil’s soybean crop at 60.5 million tonnes and Argentina’s at 47 million tonnes.

U.S. soybean oil export sales continue to be impressive as commitments of 97,800 tonnes made during the week ended January 24 were the largest weekly sales in over a decade. The sales push has prompted some analysts to boost 2007-08 soyoil export projections to roughly 1.04 million tonnes, which would be the highest total since the 2001-02 marketing year when exports totaled 1.14 million tonnes. The majority of the increase in projected exports for the current marketing year has been allocated to China and countries in northern Africa. There is the risk that soyoil exports could be even larger because export commitments currently are well ahead of the 2001-02 pace. However, the shipping pace needs to pick up considerably with outstanding sales currently at 297,000 tonnes compared to 197,000 tonnes at this juncture of the 2001-02 marketing year.

Meanwhile, soymeal export sales recorded a marketing year high with net sales of 365,800 tonnes in the week ending February 1. This was 62% above the previous week and 160% above the prior 4-week average.

Perdue AgriBusiness has announced it will be contracting low linolenic soybeans from DuPont business Pioneer Hi-Bred for the 2008 growing season to support the marketplace demand for healthier foods, according to a report from the Public Ledger. John Ade, Perdue vice president of grain sales and merchandising, said: “Perdue is excited about the opportunity low lin soybeans bring to both soybean growers on the Eastern Shore and our food company customers who are seeking to lower the trans fat content of their products. Adding value to growers' crops and offering solutions to customers is good news for agriculture."

Contracts for these opportunities will be made with growers on the Eastern Shore of Maryland and Delaware and in southern Pennsylvania. Perdue will pay a 60¢ per bushel premium for soybeans stored on-farm and delivered after harvest.

Russ Sanders, Pioneer's marketing director, said: “We're very excited about expanding low lin soybean contracting through a quality organization such as Perdue. This is great news for growers seeking greater income through premiums and the food processors that seek to market healthier foods."

The South Dakota Senate has approved a bill that would provide a tax break for biodiesel use. A separate effort to repeal a tax break on ethanol use failed. At the request of Governor Mike Rounds, senators unanimously approved a bill on January 24 that would reduce the fuel tax on diesel that contains at least 5% biodiesel by 2 cents per gallon. The fuel tax applied to regular gasoline and diesel now is 22 cents per gallon. The bill – SB148 – would trim the per-gallon tax on biodiesel to 20 cents. The per-gallon tax on ethanol already is 20 cents. The tax break for biodiesel now moves to the House for further consideration.

Rounds said he wants to provide the same incentive for ethanol use to truckers and other consumers of diesel. Offering the discounted tax rate for biodiesel would encourage production of the fuel made mostly from soybeans, he said.

Tax breaks would not start until biodiesel facilities in South Dakota reach a capacity of 20 million gallons annually and produce at least 10 million gallons annually. The tax break would end once production reached about 40 million gallons annually. The price tag for the incentive would be about $800,000.

China’s edible oil consumption is expected to jump to 22.4 million tonnes in 2007, a rise of 1.4 million tonnes from last year’s 21 million tonnes according to the country’s State Grain Administration (SGA). According to a report from the Public Ledger, the SGA said there was a “strong potential” for a shortage in domestic edible oil production this year due to lower yields of oilseeds and greater consumption. This is likely to lead to greater imports of soyoil after imports of all edible oils reached 8.38 million tonnes, up 1.69 million tonnes from 2006.

SGA data shows Chinese consumption of cooking oil increased at a stable rate last year due to greater economic prosperity and per capita consumption is now 17 kg annually - almost double the volume from a decade ago.

The report also said the price of edible oils is likely to jump this year due to the global shrinking of soybean planting areas, increasing international shipment fees and mounting domestic consumption.

The soy complex closed mostly higher on February 7 reflecting strong export sales. The funds returned to buy soybeans and soybean meal as concerns faded that the federal government would reduce the Renewable Fuel Standard. March bean futures closed up $4.78, finishing at $489.24; May gained $4.23, closing at $496.22; and July was up $3.86, ending at $500.54. March meal increased $10.91 closing at $398.70; May was $8.49 higher, finishing at $404.21; and July meal closed up $8.82 ending at $408.40. March oil decreased $0.88 to finish at $1215.18; May was down $2.20, closing at $1231.05; and July was $0.88 higher, closing at $1244.72.

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