USDA’s March 31 Prospective Plantings and Stocks reports are arguably among the most important of the year, providing early season guidance to U.S. farmers’ thoughts on acreage to be planted in 2008, and clues to ongoing rates of U.S. grain usage. soybean acreage intentions and stocks both exceeded expectations and implied a much more relaxed supply outlook for the remainder of this season and that ahead. The stocks estimate of 38.9 million tonnes is indeed below last year, but is 2.04 million tonnes above the pre-report estimate and suggests that the 2007 crop was greatly underestimated. The large 30.3 million hectares planting estimate for 2008 will provide ample production to meet soybean needs, with average weather. And, the task of attracting new Brazilian soy acres is relieved, for this year at least.

The adoption of USDA’s soybean planting intention of 30.3 million hectares results in a 2008-09 balance sheet that is no longer tight. However, analysts believe that soybean plantings will be hard-pressed to reach 30.3 million hectares given the huge gains in corn’s net revenue advantage over soybeans since the first two weeks of March when USDA conducted its acreage survey. The drop in 2009 futures toward $10.00 also calls into question weather Brazil will expand soybean area and threatens a reduction in plantings. Such a contraction likely would have limited impact on 2008-09 U.S. soybean exports, but would be positive for 2009-10 U.S. export prospects.

The drop in soybean complex futures looks to have put biodiesel margins back in the black. Even biodiesel priced comparable to diesel plus the tax credits now appears to be profitable given a breakeven soybean oil futures price of 52 cents per pounds. Biodiesel producers that have been able to sell biodiesel at a premium to diesel have been profitable for a few weeks.

The threat to Brazilian area expansion and the potential for biodiesel production to ramp provide a longer term fundamental underpinning for soybean complex futures. In the short run, however, soybean complex could undershoot those levels as speculative selling runs its course.

The longest farm walkout in Argentine history ended April 2, although farmers are threatening to resume highway blockades in 30 days if the center-left government does not grant concessions on tax hikes that farmers say have reduced their profits to point where they can barely make a living. Interior Minister Florencio Randazzo said the government is interested in opening negotiations with farmers who blockaded highways and triggered shortages before suspending their strike. But no talks started immediately.

The U.S. export program is getting a bit of a boost during the second half of the marketing year because of the farmers’ strike in Argentina that has prevented grains and oilseeds from reaching exporters and processors during the past few weeks. It was announced yesterday that the strike is being suspended for 30 days, but some additional export business could switch from Argentina to the U.S. as it will take some time for Argentina’s export pipeline to be replenished. News that some workers at one of Brazil’s major ports went on strike April 2 also was supportive to soybean futures, but those workers returned to work April 3.

Meanwhile, another strike at the Paranagua port in northern Brazil that began April 2 has paralyzed the port’s soybean shipments to overseas destinations, local media reported. Port workers launched a strike demanding better wages, according to the port authority. Paranagua is principally a soybean exporting port, handling about 60%, or 11 million tonnes, of Brazil’s soybean exports.

The strike has caused loading and unloading stoppage as only two trucks were unloading at the port due to the strike, while the rest were waiting in line outside the port. Under normal conditions, workers will unload 70 trucks per hour.

Four huge transportation belts, used to transfer the soybean from the storage rooms to the ships, have also stopped operation, said the port operators. Entry of other ships has also been delayed at Paranagua port due to the strike.

Brazilian port workers union, in a separate issue, announced recently that it is planning a 24-hour strike across several ports for April 14 to protest use of non-unionized laborers at a terminal at Itajai port, Victor Manuel Simoes Pinto at Cargonave added. Agricultural inspectors also have threatened a strike in April but have not confirmed a date. Strikes of the inspectors can affect the flow of agricultural exports and imports that require sanitary approval from the agriculture ministry. Customs agents at Brazilian ports have been on strike for more than a week but they have not had an effect on the flow of soybean or grain exports from Brazil’s ports.

A moratorium on the purchase of soybeans from newly deforested areas of the Amazon appears to be keeping grain fields from adding to rain forest destruction, environmentalists and an industry group have said. No new soybean plantations were detected in any of the 193 areas that registered deforestation of 250 acres or more between August 2006 and August 2007, according to Greenpeace and the Brazilian Vegetable Oils Industry Association. Cargill, Archer Daniels Midland Co. and Bunge Ltd., as well as France’s Dreyfus and Brazilian-owned Amaggi, are participating.

“Without a doubt the results show that soy moratorium is being respected and that is good news,” said Paulo Adario, coordinator of Greenpeace’s Amazon campaign. “However, the high prices of soy on the international market are increasing producers’ appetites for more land, which creates and important challenge for the companies committed to the moratorium.”

The soy complex closed up on April 3, reflecting speculative buying on thoughts that soybeans had gotten too cheap relative to corn following the soybean market’s substantial setback triggered by fund liquidation and the March 31 USDA reports that estimated March 1 soybean stocks and U.S. soybean planting intentions both above market expectations. May bean futures closed up $5.14, finishing at $461.86; July gained $6.06, closing at $468.84; and August was up $5.88, ending at $465.91. May meal increased $2.43 closing at $367.29; July was $1.87 higher, finishing at $370.59; and August meal closed up $2.76, ending at $365.41. May soyoil increased $7.05 to finish at $1220.69; July was up $6.61, closing at $1237.22; and August was $4.63 higher, closing at $1241.85.

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