October 2, 2006
USDA Revises 2005-06 Soybean Estimates
Soybean stocks stored on farms as of September 1, 2006 totaled 4.79 million tonnes, according to USDA in its latest stocks report. Off-farm stocks are pegged by USDA at 7.40 million tonnes and indicated disappearance for June - August 2006 totaled 14.8 million tonnes, up 22% from the same period a year earlier.
USDA also has revised 2005 soybean production data. USDA now pegs that year’s production at 83.3 million tonnes. Planted area is revised to 29.1 million hectares and harvested area is now 28.9 million hectares. USDA now says the 2005 yield is 2.7 tonnes per hectare.
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Disaster Assistance Legislation On Hold Until After Elections
Efforts to force a House vote via a discharge petition (HRes 998) on a disaster-aid package for agriculture before the election recess failed. Relief bills would provide up to $6.5 billion to farmers. More than half the aid money would go to those who can demonstrate losses. However, up to $1.8 billion would go to all farmers who get government payments, regardless of where they live or what they grow. The money also is supposed to help with high fuel prices.
“You’re going to have some people that are going to have a record crop, a much better price, and they would still receive payments,” USDA Secretary Mike Johanns said in an interview with the Associated Press. “Americans are always willing to reach out and help people who have suffered,” Johanns said. “But justifiably so, the taxpayer gets very worried about programs that aren’t targeted.” The Bush administration has previously stated it wants to wait until the corn and soybean harvests are finished in October and November to see whether more aid is needed.
Meanwhile, Representative Jeff Flake (R-Ariz.) sent a letter to House Majority Leader John Boehner (R-Ohio) urging him to offset any supplemental agriculture disaster aid package with cuts in other agriculture spending. “When Congress considered the Farm Bill in 2002, we were told that these annual supplemental agriculture disaster aid packages would stop,” said Flake. “Obviously, that hasn’t been the case.” He added, “Our agriculture subsidies are too expensive and trade-distorting as it is; adding additional disaster relief will only exacerbate the problem.”
National Biodiesel Board Expects 2015 Biodiesel Production Capacity At 1.85 Billion Gallons
Joe Jobe, Executive Director of the National Biodiesel Board (NBB), said he estimated 2015 U.S. biodiesel production capacity at 1.85 billon gallons. This figure compares with the official NBB estimate of one billion gallons. Production of biodiesel in the U.S. is expected to total about 250million gallons in 2006, sharply up from 75 million gallons in 2005. Jobe said if the United States were able to produce 1.85 billion gallons, it would replace 5% of the country’s diesel needs.
In related news, the Environmental Protection Agency (EPA) recently proposed new clean fuel rules to comply with the 2005 Energy Act. Specifically, EPA proposes 3.71% of all U.S. gasoline sold next year to be from renewable sources. This is up from 2.78% in 2006. The share is to rise to 4.72% in 2008 and to 4.85% in 2012.
For its future supply and demand scenarios EPA develops a “high growth” case (demand to hit 9.6 billion gallons by 2012) and a “low growth” case (7.5 billion gallons by 2012). EPA projected that the transition to renewable fuels will reduce 2012 petroleum consumption by 2.3 to 3.9 billion gallons or roughly 1.0 to 1.6% of the petroleum that would otherwise be used by the transportation sector. Likewise renewable fuels could reduce CO2 equivalent green house gas emissions by 9 to 14 million tonnes in 2012.
Georgia Governor Proposes Tax Exemption For Biofuel Facility Construction
Georgia Gov. Sonny Perdue (R) last week proposed a sales tax exemption for materials and equipment used in the construction of biofuel facilities in Georgia, which are currently taxed at 4 percent. The exemption, which would cost the state anywhere from $2 million to $4 million, would be available to facilities producing and processing the biofuels ethanol, biodiesel, and butanol, which would be derived from Georgia-grown agriculture products and biomass, Perdue said. It would have to be approved by the state’s General Assembly in the 2007 legislative session. According to Perdue, the biofuel tax incentive will help Georgia in attracting companies in the biofuels industry, he said.
The future biodiesel production facility, BullDog BioDiesel LLC, will produce the fuel from soybean oil as well as some production of fuels derived from animal fats and cooking waste oil. The company will produce 15 million gallons of fuel annually.
Significant Differences In Local Estimates Of India Soybean Production
India’s soybeans are mostly in the pod filling stage with a wide range of production potential reports. In addition to several sources having differences concerning this season’s forecast, estimates for last season have a 2-million-tonne range.
India’s farm ministry forecast soybean production at 7.55 million tonnes, which is lower than its estimate of 8.35 million tonnes produced last year. The Central Organization of Oil Industry and Trade (COOIT) forecast soybean production at 7 million tonnes, about equal to its estimate of last season’s production.
Soy Complex Up On Higher Grain Prices, Exports And Positioning Ahead Of USDA Report
The soy complex closed higher on September 28 reflectinga jump in the other grain prices, solid export sales news and short-covering ahead of the September 29 USDA stocks report. Meal failed to hold the early strength but continued buying in the soybean oil market helped soybeans hold on to much of the early gains and when meal recovered into the close, soybeans received an additional boost.November bean futures closed up $3.71 finishing at $203.04; January was $3.71 higher, closing at $208.19; and March gained $3.64 ending at $212.16. October meal was up $1.87, closing at $178.68; December was $1.87 higher, finishing at $179.90; and January was up $1.87 to finish at $181.33. October oil closed $5.29 higher to finish at $527.56; December was up $6.83, closing at $537.26; and January increased $7.05, ending at $545.64.
