December 18, 2006
USDA: U.S. Production Estimate Stable
Total U.S. oilseed production is projected by USDA to be 97 million tonnes, down fractionally from the previous forecast due to a slight reduction in cottonseed. U.S. soybean production in 2006-07 is expected to reach 87.2 million tonnes, according to USDA. Soybean ending stocks for 2006-07 are projected at a record 15.4 million tonnes, up 26 percent from 2005-06.
Global oilseed production for 2006-07 is projected at 395.5 million tons. USDA expects global oilseed to be 226.8 million tonnes. Of note, USDA boosted its estimate for soybean production in Argentina to 42 million tonnes based on increased area as producers respond to higher prices. Global oilseed crush is higher than previously forecast, reflecting higher soybean meal consumption, mainly in Brazil and Vietnam.
PAGE TOP
Soybean Oil Used In Biodiesel Production on the Decline
Biodiesel production declined in September and declined further in October, according to Informa’s analysis of Census Bureau data released this past week. This includes 143 million pounds of refined soybean oil was used in the production of biodiesel during October reported the Census Bureau. October usage was below the previous month’s 201 million pounds and August’s peak usage of 211 million pounds. The erosion in biodiesel margins appears to have discouraged biodiesel production just as biodiesel production capacity has increased from around 500 million gallons this summer to 700 million gallons currently.
Implications From The Trans Fats Ban In New York City Restaurants
The New York City Board of Health voted recently to eliminate the use of artificial trans fats in its restaurants. Vegetables oils, such as soybean oil, used for frying often are hydrogenated to improve its cooking characteristics and stability. However, this process creates trans fatty acids, or trans fats. Trans fats increase the risk of heart disease by increasing “bad” cholesterol, while reducing “good” cholesterol. Like the trans fat labeling requirement for packaged foods implemented by the FDA at the beginning of this year, the New York City ruling allows food products containing less than 0.5 grams of trans fat per serving to be considered to have zero grams of trans fat.
The new regulations will be implemented in two steps. By July 1, 2007, the city’s restaurants must stop using oils, margarines and vegetable shortenings containing trans fats for deep frying foods such as french fries and fried chicken. Hydrogenated vegetable oils containing trans fats used to deep fry yeast dough and cake batter for foods such as donuts, cookies and cakes must be eliminated by July 1, 2008.
In recent years, many restaurant chains and food manufacturers have been adjusting their cooking formulas to move away from hydrogenated vegetable oils, being careful not to noticeably change the taste of their food products. Some are switching to oils extracted from special sunflower or soybean varieties that are low in linoleic acid, and, therefore, can be used for cooking without being hydrogenated. However, these oils are relatively expensive as they are in limited supply. New York’s action will accelerate the reformulation away from hydrogenated soybean oil. Other government bodies may be encouraged to take similar actions. National chains probably will make changes for all of their restaurants
The move to reduce trans fat content to less than 0.5 grams per serving does not necessarily mean that the use of hydrogenated soybean oil is completely eliminated. It does at least portend a reduction in hydrogenated soybean oil in vegetable oil blends, which could include some soybean oil than has not been hydrogenated.
Soybeans Drive 1-Month U.S. Ag Export Record In October
USDA says the value of U.S. agricultural exports reached an all-time 1-month high of $6.9 billion in October. This is up $1.6 billion over September. For the first 10 months of calendar year 2006, exports are at $57.6 billion, about 12 percent higher than the first 10 months of calendar year 2005. USDA says most of the increase comes from bulk products as soybean exports normally surge in the fall. “In fact, soybean shipments to China grew from about 500,000 metric tons in September to over 2.2 million metric tons in October. High-value products also increased about 11 percent above this time last year,” USDA says.
The value of U.S. agricultural imports rose roughly 12 percent from September to October, to nearly $6 billion. Year-to-date imports are $54 billion, roughly $5 billion higher than the first 10 months of calendar year 2005. Most of the increase comes from fruit, vegetable, and vegetable oil imports, although there were continued increases in wine, malt beverages, sugar, and rubber, adds USDA.
Brazil’s Soybean Exports May Suffer When Biodiesel Blending Becomes Mandatory
Brazil could likely see a decline in exports of soybean and soy products once the mandatory blending of biodiesel comes into effect in 2008, according to a report in The Public Ledger. “The biodiesel program in Brazil that requires 2% blending is voluntary in nature at present, but would become mandatory from 2008,” said Ricardo Arioli Silva, administrative vice-president of the Association of Soybean Producers of Mato Grosso. “If we do not increase our production, the export of soy products would decline, as more soybeans would be crushed for use as biodiesel,” he said.
Brazil Reports More Outbreaks Of Rust
Brazil’s crop science institute, Embrapa said last week that 17 new discoveries of Asian soybean rust were found from December 8 through December 14 in six states, according to a report from Dow Jones Newswires. The discoveries were made in Mato Grosso do Sul, Rio Grande do Sul, Mato Grosso, Parana, Sao Paulo and Goais, all of the main soy-producing states. So far this crop year, 63 discoveries of Asian soybean rust have been made in the 2006-07 crop. Rain in regions where the discoveries were made in the center-west this week is seen impeding fungicide coverage on the infected plants. Brazil’s Ministry of Agriculture has yet to amend its forecast for a 56.1 million tonne soybean harvest.
Soy Complex Mostly Higher, Bearish Fundamentals Seen
The soy complex closed mostly higher on December 7. Soybean fundamentals are bearish, especially if South American weather continues to be favorable. With the soy/corn ratios so low, however, soybean prices are unlikely to decline much unless the corn market suffers a setback. January bean futures closed up $0.64, finishing at $243.52; March was $0.55 higher, closing at $248.94; and May gained $0.83 ending at $253.71. December meal was up $0.77, closing at $206.35; January was $0.55 higher, finishing at $208.56; and March increased $0.22 to finish at $212.74. December oil closed $1.76 lower to finish at $623.02; January was down $3.75, closing at $625.89; and March lost $5.07, ending at $634.70.
