The Census Bureau pegged the January soybean crush at 4.36 million tonnes. While this was slightly below trade expectations of around 4.38 million tonnes, the December crush was revised by 40,800 tonnes to 4.46 million tonnes. With soybean meal stocks at the end of January dropping to 268,000 tonnes, domestic soybean meal disappearance was larger than expected to both December and January. Soybean oil stocks also were smaller than expected at 1.4 million tonnes for the end of January, but December stocks were revised up 8,620 tonnes to 1.44 million tonnes. Implied soybean oil domestic disappearance looks to have been an all-time record during January, which is hard to reconcile with the punishment that biodiesel margins have incurred, but may be explained by pipelining of stocks for February’s huge soybean oil export program. The soybean oil yield increased seasonally to 192 kg per tonne, which was the second highest on record for January after 2006’s 193.257 kg per tonne.

The U.S. Gulf ports have not lost much market share to the U.S. Pacific Northwest (PNW) for exports to Asia. The PNW has been busy loading soybeans bound for China while the Gulf is also benefiting for strong corn exports to non-Asian destinations. Total weekly grain and soybean export inspections have been running above 2.72 million tonnes for most of the marketing year. Exports through the PNW are choppier reflecting the bunching of trains. Winter weather in the PNW has led to avalanche concerns through the Cascade Mountains but the railroads continue to get cars to the elevators to load ships.

Except for the holiday weeks, grain carloadings have been running above 25,000. Movements to export position were strong to the Texas Gulf and PNW. Carloadings destined for the Texas Gulf have since slowed as wheat exports turn soft. Implied domestic carloadings (total carloadings less export carloadings) have been holding strong in line with the 5-year average.

With the Center Gulf grain and soybean export forecast to be the strongest showing in several years, grain barge movements will benefit. However, the loadings are not showing up off the reaches of the navigation system above the locks and dams. Instead grain volumes are entering the system below the Chain of Rocks Lock near St. Louis and below Lock 52 on the Ohio River.

The Illinois River is flooding and volumes are scarce coming off that system. The Mississippi River above Keokuk is still closed for another three weeks when it is scheduled to reopen to navigation for the season.

China soyoil prices hit record highs this week as crushers were running at low capacity amid weak soymeal demand, traders said this week. Farmers in Heilongjiang were holding back selling oilseed from the 2007 crop. “We cannot get hold of any soybeans,” said an official at Jiusan Oils and Fats Co Ltd, one of the country’s top state-owned crushers, based in Heilongjiang province. “Farmers are not selling any more.”

In addition, China’s imports of the oilseed were also lower in the month at around 2 million tonnes, which compared with normal consumption at between 2.5 to 3 million tonnes, according to local Chinese analysts. According to a report from the state-owned China National Grain and Oils Information Centre, China’s soybean imports might double this month to around 2.5 million tonnes compared with those of the same period last year.

The general Chinese economy is also playing a factor. Last month saw China’s inflation accelerate to its fastest pace in more than 11 years after the worst snowstorms in decades disrupted food supplies. The country’s statistics bureau said that consumer prices rose 7.1% from a year earlier, after gaining 6.5% in December.

Also, China’s poor rapeseed crop has made the oilseed market that much tighter. China’s National Grains and Oils Information Centre said on February 15 that almost half of the autumn/winter rapeseed crop has been affected by damage caused by rain and snow.

The share of soybean oil-based biodiesel in total U.S. biodiesel output is falling due to the record high prices of the soy complex, Alan Weber, adviser to the National Biodiesel Board, said last week. “The share of soybean oil-based biodiesel in total biodiesel production was 90% in 2006, it averaged 80% in 2007 and was around 64.5% in December 2007,” Weber said.

Dow Jones Newswires notes that U.S. biodiesel production has been affected by record high soybean oil prices since October last year, though the overall production in 2007 is estimated to have doubled on year to 500 million gallons.

The soy complex closed higher on February 28 reflecting a drop in the U.S. dollar to new lows and a rally in crude oil and precious metals to new highs While the soybean and soybean oil markets face the threat of tightening supplies that provides a fundamental rationale for the relentless rally to unprecedented price levels, speculative interest in commodities amid inflationary concerns likely is at least contributing to the rally. Soybean oil prices are well above levels than can justified for making biodiesel that is priced comparably to conventional diesel; however, there is some niche premium demand for biodiesel in the U.S. and export demand from Europe that keeps some biodiesel production going. March bean futures closed up $14.51, finishing at $550.60; May gained $13.69, closing at $555.74; and July was up $12.86, ending at $559.88. March meal increased $8.38 closing at $411.71; May was $7.61 higher, finishing at $419.65; and July meal closed up $6.94 ending at $422.40. March oil increased $43.65 to finish at $1464.96; May was up $40.34, closing at $1483.70; and July was $40.79 higher, closing at $1498.47.

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