It appears that whatever additional stocks were found in USDA’s March 1 have been, in large part, depleted by a recent flurry of U.S. export sales of soybeans. Soybean export sales for the week ending April 3 were a record 538,000 tonnes for that week and another 240,000 tonnes of sales to China subsequently were announced via USDA’s reporting system. U.S. export sales of soybeans to China usually are almost nil at this point in the marketing year.

However, with Argentina’s soybean exports impeded by a 3-week farmer strike that depleted soybean supplies at crushing and export facilities, the United States has picked up a considerable amount of export business that presumably will be shipped over the next month or so.

U.S. soyoil exports are likely to remain high in coming weeks as problems hit rival South American suppliers, oilseeds analysts Oil World has forecast. The analyst said that although the Argentine farm strike has been interrupted for 30 days, Argentine exports of soybeans, soyoil and meal are still behind schedule in the first half of April. “There are also export delays in Brazil due to strike action by customs officers and port workers and an export ban for soyoil and meal in Bolivia,” it said.

Oil World explained that U.S. exports of soyoil have increased sharply to a 10-year high of 470,000 tonnes between January and March 2008, compared with just 174,000 tonnes a year earlier and it estimates that exports are likely to remain high in the near term. “Also, U.S. exports of soybeans and soymeal have been higher than expected in recent weeks as a result of the South American export problems,” it said.

The Census Bureau reported last week that usage of fats and oils in methyl ester (mainly biodiesel) production increased in January from December and rose further in February to a level that trailed only the record level from last August. However, a large share of U.S. biodiesel continues to be produced for the export market as biodiesel margins are minimal in areas where biodiesel is priced no more than $1 excise tax credit above conventional diesel. From November through February, U.S. net exports of biodiesel represented 45 percent of domestic production. Increasing quantities of biodiesel are coming through U.S. ports and being blended with a small amount of conventional diesel to capture the $1 per gallon subsidy before being re-exported. Most of that has been either biodiesel made in Southeast Asia from palm oil or Argentine biodiesel made from soybean oil. The dominant export market for biodiesel continues to the EU- 27, where diesel prices are higher than those in the United States, especially given the weak dollar and strong Euro, and domestic producers who are facing poor profitability.

China’s soybean traders expect the market to turn bullish as crushers start active purchases in the coming week, spurred by fears that prices will rise further, according to a survey by a state run think tank on April 18. Demand for soybean imports also will increase, the China National Grain and Oils Information Center (CNGOIC) said.

A wide gap between international and Chinese soyoil prices will drive up the domestic price and also market demand as crushers see less possibility of a price drop and merchants need to replenish stocks, the CNGOIC said. Expectations for soyoil prices have turned from bearish to neutral, CNGOIC noted.

In related news, China is working on measures to limit the expansion of its soybean crushing plants as output is already exceeding demand, according to a senior official at the country’s top planning agency. He Yanli, deputy division head for the National Development and Reform Commission (NDRC), said the government would encourage domestic firms to expand by taking over smaller rivals. “In principle, we will not approve the building of new crushers or the expansion by existing firms in the years to come,” she said. “The crushing capacity will be controlled at a reasonable level.”

She added that China would need 50 million tonnes of soybeans annually by 2010 and the country was now operating at around half its annual crush capacity of 84 million tonnes. Soybean imports are also expected to grow, as will domestic acreage of the oilseed, and the country’s yearly requirements for edible oils are expected to hit 26 million tonnes by 2010.

The Senate on April 17 approved by voice vote a measure that would extend the 2002 farm Act by one week. The action, which is intended to give lawmakers negotiating the next farm bill additional time to complete their work, followed by one day an identical vote by the House. The bill next goes to the White House where there has been no clear signal whether President Bush will sign or veto the measure.

The extension would allow provisions of that law to remain operational through April 25. If the president signs the extension, it would put significant pressure on Congress to complete the bill by next week. Sen. Larry Craig (R-Idaho) says negotiators should either agree on a new farm bill within the next week or extend current farm policy for no less than one year.

The soy complex closed mixed on April 17 with soybeans and meal higher, but soyoil declining slightly.  The soybean market is consolidating the gains of this month’s rally. While soybean complex futures are subject to considerable volatility at these lofty levels, there appears to be support for these levels from record high corn prices that likely is shifting acres away from soybeans to corn that threatens to tighten up a comfortable 2008-09 carryout. Elevated Argentine export taxes call into question Argentina’s ability to sustain its ongoing acreage expansion that has accounted from most of the world’s soybean production growth over the last 5 years. The lack of a seasonal decline in soybean export sales and the soybean crush point to a tight 2007-08 U.S. soybean carryout that drops to minimal levels. Meanwhile, the NOPA crush for March released last week was 4.03 million tonnes, about 81,600 tonnes below the trade’s expectations. Although the March crush was below expectations, the daily crush rate was equal to that of February. Over the last 10 years, there was only 1 year (2007) when the daily crush did not decline from February to March.  May bean futures closed up $2.11, finishing at $496.22; July gained $2.02, closing at $502.10; and August was up $2.20, ending at $498.24. May meal increased $5.51 closing at $380.29; July was $5.73 higher, finishing at $385.21; and August meal closed up $6.61, ending at $380.29. May soyoil decreased $15.43 to finish at $1341.06; July was down $15.43, closing at $1357.59; and August was $15.43 lower, closing at $1364.65.

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