December 11, 2006
New York City Trans Fat Ban Could Spur Demand For Low Linolenic Soybeans
A ban on trans fatty acids in food served by New York City restaurants will benefit the “trans-free” soyoil business if farmers can grow enough of new low linolenic soybean varieties. NYC’s Board of Health last week voted to make New York the first city in the United States to ban artificial trans fats in restaurant food, adding to the national move toward more heart-healthful vegetable oils.
Consumer advocates hailed New York’s move and predicted that more cities would follow suit. Trans fat bans have been considered by Chicago and some cities in California, among other places.
Soybeans with low linolenic acid content yield oil that does not require partial hydrogenation. This year, U.S. farmers raised enough low-linolenic soybeans to produce 300 million pounds of oil, a figure that could triple in 2007.
Major crop seed companies that have developed low-linolenic soybean varieties also expect to sharply increase plantings next year. But even with sharp increases in acreage, it could take up to eight years to raise enough low-linolenic soybeans to meet domestic demand for trans-free soyoil.
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China’s Soybean Production Declines; Imports Increase
China’s soybean output will slip slightly this year reflecting cuts in soybean planted area. The average yield is expected to equal that of last year, according to a forecast made by the Ministry of Agriculture. Imports are expected to increase to support modest consumption growth. According to Ministry of Agriculture statistics, soybean imports totaled 21.252 million tonnes in the first three quarters of this year, up 8.8% year on year, while exports amounted to 284,000 tonnes, down 13.2% year on year.
ADM To Increase Oilseed Crush Capacity In 2007
Archer Daniels Midland Co. said last week that to meet growing biofuels demand it will increase its oilseed crushing capacity through expansions at oilseed crushing plants in the United States and Canada. Five soybean crushing plants will be expanded in Quincy, Illinois; Frankfort, Indiana; Mexico, Missouri; Fremont, Nebraska and Des Moines, Iowa. The expansions are scheduled to be completed in mid-2008. ADM operates more than 240 oilseed processing plants.
The expansions will support ADM’s two U.S. biodiesel facilities. The company operates a 100,000 tonne plant in Mexico, Missouri, in cooperation with several farmer coops, and has another in Velva, North Dakota, with a production capacity of 280,000 tonnes, under construction.
Freight Price Indices Higher Again
The cost of moving goods and commodities by rail and on the inland navigation system increased during October. Rail costs were up 7% year over year and up 1% from September. Inland towing costs were 15% higher than last year and 3% higher than September. Truck costs actually retreated 1% from September, likely because truckers are passing along changes in fuel surcharges on a more regular basis. However, truck rates were 2% higher year over year for October.
With crude prices firming up it will not be too surprising to see truck costs increase over the coming months. Although, there is a slight easing in truckloads that could offer an easing in truck rates or at least hold them in check.
Johanns, Harkin To Discuss Farm Bill This Week
The developing of a new farm bill next year will be one topic of discussion when Agriculture Secretary Mike Johanns meets December 12 with incoming Chairman of the Senate Agriculture committee, Sen. Tom Harkin (D-Iowa). Harkin wants to discuss the future of agriculture policy and “shaping a bold farm bill” during the meeting, Harkin spokesman Tom Reynolds told Dow Jones Newswires.
Meanwhile, Harkin commented last week that renewable fuels and land stewardship programs will play an increasingly important role in guiding U.S. farm supports. Harkin believes that biofuel and conservation programs are ways to help U.S. farmers and ranchers while complying with world trade rules. “As we move into energy and into conservation, there are ways of providing the kind of subsidies and support for farmers without violating WTO [trade rules],” Harkin said.
Regarding the timing for the new farm bill, Harkin said he saw “no reason why we can’t get it done before the deadline” (the end of 2007). He said he would begin hearings in January to gather ideas for the farm bill and would outline his proposals for it at some point during the first half of 2007.
Rep. Collin Peterson (D-Minn.), incoming House Ag Committee Chairman, said his panel probably would not begin to draft a bill until April. Peterson said he wanted to give the Budget Committee time to decide how much money will be available for agriculture. Subcommittees would begin the process with hearings and drafting sessions before the full committee assembles all the components of the farm bill, said Peterson.
Soy Complex Mostly Higher As Corn Market Rebounds, Supporting Soymeal
The soy complex closed mostly higher on December 7 as strength in soymeal helped support the market while soyoil saw weakness from higher than expected canola production in Canada in spite of solid weekly sales. A rebound in corn added to the bullish tone, which helped support the increase in soymeal prices. Good weather for developing crops in South America and a steady flow of deliveries against the December product prices might limit the upside. However, any declines in soybean prices will have to be accompanied by a decline corn prices given how low the soy/corn ratio has dropped and the potential for a large shift in acreage from soybeans to corn next year. January bean futures closed up $2.85, finishing at $243.24; March was $2.94 higher, closing at $248.48; and May gained $3.03 ending at $251.88. December meal was up $3.75, closing at $206.13; January was $4.08 higher, finishing at $209.99; and March increased $3.64 to finish at $212.63. December oil closed $0.44 lower to finish at $624.78; January was down $1.10, closing at $633.38; and March gained $0.44, ending at $643.96.
