October 16, 2006
USDA Expects Record U.S. Soybean Crop In 2006-07
Total U.S. oilseed production is projected at 96.4 million tonnes, USDA said last week. U.S. oilseed ending stocks for 2006-07 are projected to be 16.3 million tonnes, up 2.2 million tonnes from revised 2005-06 ending stocks. U.S. soybean production is pegged at a record 86.8 million tonnes, with both yields and harvested area turning out to be higher than previously thought. USDA expects increased U.S. soybean supplies for 2006-07, which could lead to larger export and crush expectations. Soybean ending stocks are projected at 15.1 million tonnes, USDA said.
Global oilseed production for 2006-07 is projected at 390.4 million tonnes, up 2.1 million tonnes from 2005-06, according to USDA. This is based on larger than expected rapeseed, sunflowerseed, and cottonseed production. Global oilseed stocks for 2006-07 could also be higher than previously expected as higher production and increased beginning stocks are only partly offset by increased use.
PAGE TOP
ASA: Lack Of 2005 Countercyclical Payments A Sign Farm Bill Needs Improvement
The American Soybean Association said last week that USDA’s announcement on 2005-crop countercyclical payments is “a prime example of why soybean growers need a better income safety net. ASA is asking Congress to correct inequities under the current Farm Bill where target prices for oilseed crops are disproportionately low compared to other program crops.” “The reason soybean growers didn’t receive a counter-cyclical payment is because the soybean target price is disproportionately low compared to corn and other program crops,” said ASA President Richard Ostlie. “Soybean farmers have never received a counter-cyclical payment under the 2002 Farm Bill, and this situation needs to be fixed when the 2007 Farm Bill is written. An equitable target price for soybeans relative to other program crops will ensure that soybean farmers are not disadvantaged.”
ASA said it has already communicated its concern about the soybean target price to the House and Senate Agriculture committees. On September 20, ASA First Vice President John Hoffman testified before the House Agriculture Committee on behalf of the National Sunflower Association and the U.S. Canola Association, as well as ASA. Hoffman said that “oilseed producers have strongly supported the Marketing Loan as the most effective tool for ensuring the U.S. crops are competitive with foreign oilseed exports and for supporting producer income when world prices decline.” He went on to say that “the target prices established for oilseed crops in the current farm program are disproportionately low compared to other program crops.”
Biodiesel Consumption of Soybean Oil Up Sharply
The Census Bureau pegged refined soybean oil consumption in methyl esters (biodiesel) production during August at 81,200 tonnes; this was well above July usage of 64,000 tonnes that was revised up by 16,300 tonnes. August biodiesel consumption of refined soybean oil also exceeded June consumption of 76,700 tonnes that was revised up by 12,700 tonnes. May consumption also was revised up by 1,360 tonnes to 66,200 as was April consumption that was revised up by 4,540 tonnes to 48,500 tonnes. The quantity of crude soybean oil used to produce biodiesel appears to have expanded to about 9,070 tonnes during August from the 2,270 tonnes to 4,540 tonnes consumed monthly so far this year as indicated by the increase in soybean oil consumed in other inedible products.
Barge Rates Remain Firm
Since the new crop year started, barge rates have shown no signs of weakness, based on the USDA’s latest barge rate call. However, rates typically run higher this time of year right on through early November. The number of empty and steel laden barges moving upbound through St. Louis the past six weeks suggests there is enough capacity to lift nearly 2 million tonnes of grain down-river.Over the past 5-years, more than 1,100 vessels moved upbound on average. The supply of barges will find plenty of use with a solid soybean and corn export program projected for the CenterGulf.
Brazilian Soybean Plantings Likely To Decrease
Brazilian farmers are expected to reduce soybean plantings in 2006-07 in response to three consecutive years of losses caused by weather-related problems and unfavorable currency movements. Soybeans planted area is expected to reach between 20.5 million and 21.2 million hectares, a reduction of between 7.6% and 5.1% on the previous year, according to the National Commodity Supply Company (Conab). Despite the reduction in plantings, Conab expects soybean output to reach between 53.5 million tonnes and 55 million tonnes.
Brazil Develops Plan To Curb Spread Of Rust
A ban on planting irrigated soybeans during Brazil’s winter, removal of wild soy plants and earlier main crop sowing should reduce soy rust disease in the centre-west region, Brazilian crop scientists announced last week. The ban was introduced in the June 15 to Sept. 15 interharvest period to try to break the cycle of the windborne fungal disease which thrives in wet and warm weather.
“There should be less risk of early outbreaks of soy rust in Primavera do Leste and other soy areas of Mato Grosso,” said Jose Tadashi Yorinori, chief plant pathologist at the federal government’s Embrapa Soy research agency. Primavera do Leste, an important soy area in the southeast of Mato Grosso, Brazil’s main soy state, even banned the planting of winter soybeans in small research plots of land.
Soy Complex Up On USDA Report And Rising Corn Prices
The soy complex closed higher on October 12 reflecting a positive crop report from USDA. Soybean market gains were also attributed to soaring corn prices that were strengthened higher by an unexpected cut in area and yield. Interior basis levels have been fairly steady amid the futures rally of the past 2 weeks as farmers have not overwhelmed the market with new-crop sales. Rain for early this week and another system which is expected to bring hefty rains for later next week could slow the harvest. November bean futures closed up $6.43 finishing at $213.02; January was $6.43 higher, closing at $218.44; and March gained $6.15 ending at $222.02. October meal was up $6.61, closing at $189.60; December was $6.72 higher, finishing at $191.03; and January was up $6.83 to finish at $192.35. October oil closed $10.36 higher to finish at $542.77; December was up $8.60, closing at $548.72; and January increased $8.38, ending at $558.20.
