October 30, 2006
U.S. Ag Attaché To EU Expects U.S. Soyoil Market Expansion
The United States’ soyoil market is facing a period of expansion in both domestic consumption and overseas exports, according to David Leishman, U.S. agricultural attaché to the European Union. He also said that soybean production and acreage has increased in recent years and that coupled with innovation in technology and new products has meant the future is bright for soybean production and soybean oil products in the United States.
“The soybean area in the United states has risen to 53.5 million hectares. The United States consumption for soybeans and soyoil is rising and so is the soybean yield per hectare. When aligned to improving technology and new products we see that there is scope for more exports from the United States.
“There is little doubt that the high price of oil and diesel is driving U.S. biodiesel production ever higher. I feel that there will be substantial growth in the market. Currently there are 86 such plants in the United States and by 2007 another 13 will have come on-stream. All of this will lead to an estimated production capacity of 7.3 million cubic meters,” said Leishman. He pointed out that the importance of biofuels to the U.S. government was emphasized by the fact that in the 2004 U.S. Farm Bill some $500 million dollars had been earmarked for energy crops and this was expected to rise to $1 billion in the 2007 Farm Bill.
Leishman emphasized that U.S. agriculture had always had an important role in supplying feed stocks for energy in the United States. However, if biofuel was to really compete with fossil fuels it would need government intervention in most countries. There are also the security and trade issues that would need to be addressed regarding bioenergy.
Leishman noted that the United States is the leading soybean exporter, with China the main importer. At present in the United States there were some 1,500 products that use soyoil in their production. This was likely to increase, said Leishman.
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Soybean Farmers Could Have Major Influence Over Brazil’s Election
Soybean farmers could decide the result of Brazil’s next election, according to a report from The Public Ledger. Angered by the 40% drop in soy prices since 2003, higher diesel and fertilizer prices and double-digit interest rates imposed by the administration of president Luiz Inacio Lula da Silva, seven of Brazil’s 10 main farming states chose the presidential challenger Geraldo Alckmin over Silva on October 1, helping to deny the president a first round victory.
Analysts say the votes of such farmers could prove crucial in deciding the eventual outcome of the presidential race, even though farm states have far fewer voters than more industrialized parts of Brazil. Many experts say Silva is not to blame for many of the farmers’ problems because he can’t control the international agricultural markets. Some key Brazilian soy growing regions, like Parana, have also suffered from dry weather.
Bunge Expands Crushing Facility Making It Largest In U.S.
Bunge North America has announced it is expanding the crush capacity of its soybean processing plant in Council Bluffs, Iowa, by more than 299,000 tonnes a year to make it the biggest soybean crushing facility in the United States, with a capacity of 2.10 million tonnes a year. The expansion will be complete by 2008.
“We will be purchasing more soybeans from our farmer customers, creating more oil to ensure that we can serve both our food customers and the growing biodiesel industry and producing more soybean meal to meet increasing demand in the western U.S. and Mexico feed markets, as well as Asia through Pacific Northwest exports,” says Carl Hausmann, president and CEO of Bunge North America.
Bunge’s Council Bluffs facility has ready access to two interstate highways and five rail lines enabling the plant to efficiently ship to both domestic and the international markets. The expansion will also increase the efficiency of the plant by bringing the processing capacity more in balance with the refining capacity.
August Census Crush Slightly Below Expectations
The Census Bureau put the August crush at 3.87 million tonnes, slightly below where a survey of analysts estimated the crush, at 3.91 million tonnes. Soyoil stocks were put at 1.35 million tonnes compared to estimates of 1.37 million tonnes. Soymeal stocks were 290,000 tonnes, well above the analyst estimate of 233,000 tonnes.
Freight Indices Mixed
Depending on the mode, the key freight indices were mixed during September as reported by the Bureau of Statistics at the Department of Labor. The barge and rail indices were slightly higher while truck was lower. The rail index for September was about 156, up 1% from August 9% higher year-over-year. The truck index totaled 130 during September, down less than 1% from August, yet 3% higher from the previous September. The inland towing industry reported an index of 192, up 1% from August and 17% higher year-over-year.
Freight pricing by truck and rail has steadily been rising while inland towing has displayed more significant increases and volatility as compared to truck and rail. By most accounts, railroads hold a considerable pricing advantage over shippers while truck rates tend to move more in line with economic conditions.
Soy Complex Mostly Higher On Fund Buying And Corn/Wheat Spreads
The soy complex closed mostly higher on October 26 reflecting a surge in oil prices and ideas that the late break the previous day was overdone which helped trigger a jump in prices into the mid-session. Technical buying helped the market hold on to the gains late, but there was not enough buying to challenge the highs from the previous day. Census crush news helped spark solid gains in oil and a move to the highest level since early August while meal gave back much of the early gains late in the session.November bean futures closed up $2.11, finishing at $230.66; January was $2.30 higher, closing at $235.80; and March gained $2.57 ending at $238.83. December meal was up $0.99, closing at $205.14; January was $1.43 higher, finishing at $205.80; and March was up $1.21 to finish at $207.67. December oil closed $10.14 higher to finish at $596.12; January was up $9.92, closing at $603.40; and March increased $9.70, ending at $611.12.
