December 04, 2006
Soyoil Supplies Abundant, Demand Bolstered by Biodiesel
Since August 2005, soybean oil futures have garnered support from heating oil futures on a Btu equivalent basis. That support fell away when energy markets eroded in September. However, soyoil futures held around 24 cents per pound this fall as U.S. soyoil became competitive with South American soyoil, and have since rallied along with soybeans. Soybean oil stocks near 3 billion pounds certainly do not justify current soyoil prices or the oil share of soybean values that is near 42 percent. However, growing biodiesel demand for soyoil is expected to sharply reduce U.S. soyoil stocks in the next few years.
Soyoil usage in biodiesel production is expected to double to 3 billion pounds in 2006-07, but not even that level could be exceeded given that some 1 billion gallons of capacity is under construction on top of the nearly 600 million gallons of current capacity. Though production capacity is rapidly expanding, margins for producing biodiesel are getting squeezed by lower energy prices and higher feedstock costs.
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Crush Reports Increase Seasonally As Expected
The Census crush report for October crush indicated that 161.66 million bushels of soybeans were crushed compared with expectations near 161.4 million bushels. Oil stocks came in at 3.006 billion pounds which was higher than trade estimates centered around 2.957 billion pounds. Meal stocks were 388,360 tonnes from trade expectations near 343,000 tonnes.
Meanwhile, the recent NOPA report pegged the August crush at 155 million bushels, which was largely in line with trade expectations. The NOPA October crush was 94 percent of NOPA-reported crush capacity.
The seasonal increase in the crush from September is normal. Relatively strong soybean meal exports and strong soybean oil prices have kept crush margins at attractive levels.
Brazil Planting Progress In Line With 2005-06 Pace
By December 1, analysts expect Brazil soybeans to be over 85 percent planted, which is ahead of average but is in line with last season when 87 percent was planted by that date. Mato Grosso and Parana were the farthest advanced, each having 90 percent planted, followed by 85 percent in Mato Grosso do Sul. Rio Grande do Sul plantings were 58 percent complete, which is in line with average but slower than last season when 65 percent was planted.
Weather has favored this season’s planting progress as well as early soybean development. The early planting is reportedly expected to make the Asian Rust problem more manageable as earlier planted crops flower and set pods prior to the peak infectious period. Furthermore, early planting will facilitate winter corn planting, which is planted following the early harvested soybeans.
ARS Scientists Developing New Methods Of Testing Cellulose From Soybean Stalks
USDA’s Agricultural Research Service (ARS) chemical engineer Justin Barone believes pieces of giant soybean stalks would make good fiberboard and other wood-substitute products as well. Barone and ARS geneticist Thomas Devine have found that the cellulose fibers in their sapling-like soybean stalks were unusually strong.
Barone now hopes that ARS can design a test that plant breeders can use to determine the strength or weakness of a plant’s cellulose. Plants could be specially bred with strong cellulose, for use in briquettes and wood substitutes, or with weak cellulose better suited for cellulosic ethanol production.
Finding new microbial enzymes to break down tough cellulose is a major obstacle to producing cellulosic ethanol from plants such as soybeans. Giving breeders a test for weak cellulose would allow them to select plants with cellulose that could be easily converted to ethanol by existing enzymes.
Devine and agronomist James McMurtrey found evidence for this two years ago, in a study showing that naturally occurring soil microbes degraded some soybean stalks more rapidly than others. Soybeans have an advantage over corn and other crops because they don’t need commercial nitrogen fertilizer. This helps ensure that producing ethanol or other products from soybeans uses less energy.
EU Will Not Appeal WTO Ruling On Biotech Moratorium
Reuters reports that the EU will not appeal against a WTO ruling that it illegally blocked genetically engineered food imports, a case which pitted the bloc against the United States and other biotech crop producers. But the decision will not settle transatlantic differences over how the EU currently allows biotech imports, which the majority of European consumers view with suspicion.
“The European Commission has decided not to appeal the…decision as the current regulatory provisions are not in any way affected by the judgment,” Peter Power, a European Commission spokesman for trade issues, said Tuesday. “The current approval system works, as evidenced by the approval of 10 authorizations since the (WTO dispute) panel was established. More authorizations are in the pipeline.”
Earlier this year, the WTO found the EU had operated a de facto moratorium on GMO products, breaking global trade rules. As Reuters points out, at the time, the European Commission –– the EU’s executive arm –– said the ruling would not alter its policy on biotech foods. But U.S. trade officials said it left the EU with no choice but to start approving applications for genetically engineered imports that had been stalled for months, or even years in some cases.
Soy Complex Lower On Strength In Grain Markets, Lower Dollar And Demand Expectations
The soy complex closed lower on November 30 as strength in other grains, a sharp break in the U.S. dollar and some uncertainty with the export flow from Argentina helped support gains early in the session. Demand news is also positive with strong export sales and talk of colder weather in the nation’s mid-section which might boost feed usage. January bean futures closed up $1.19, finishing at $251.88; March was $1.56 higher, closing at $257.30; and May gained $1.38 ending at $260.05. December meal was down $0.22, closing at $213.18; January was $0.11 lower, finishing at $216.05; and March was unchanged to finish at $219.80. December oil closed $4.41 higher to finish at $643.40; January was up $4.85, closing at $653.00; and March gained $5.51, ending at $662.92.
