January 16, 2006
84 Million Tonne Soybean Crop Expected As Yields Could Climb
USDA expects both larger soybean harvested area and higher yields for this summer’s crop and has boosted the 2005-06 soybean production estimate to 84 million tonnes. Soybean exports could reach 25.9 million tonnes. Export competition from South America has been unusually strong in recent months, reflecting large available supplies from record 2004-05 soybean crops, USDA said. Soybean stocks are projected at 13.7 million tonnes.
Total U.S. oilseed production for 2005-06 is estimated at 96.4 million tonnes, up 0.5 million tonnes from last year. Although soybean production accounts for most of the increase, sunflower seed, canola, cottonseed, and peanut production also could contribute to the boost in oilseed production. Global oilseed production for 2005-06 is projected at a record 389 million tonnes with foreign production likely to reach 292.5 million tonnes. USDA expects Brazil’s soybean production for 2004-05 to be a record 53 million tonnes despite drought in southern Brazil.
PAGE TOP Abiove Expects 57.4 Million Tonne Crop In 2005-06
Brazil's 2005-06 soybean production could reach 57.4 million tonnes, according to the latest estimate from the Brazilian Vegetable Oils Industry Association (Abiove), the country's largest association of soybean crushers. Abiove’s soybean export estimate for the 2006-07 is 24.5 million tonnes. The large soybean crop will likely lead to an increase in soymeal production in Brazil, Abiove said. The crushers estimate soymeal production estimates is 22.9 million tonnes and they also expect soymeal exports to be 13.4 million. Soyoil production for 2005-06 is believed to be 5.65 million tonnes, while the export estimate is 2.4 million tonnes.
Abiove also estimates that Brazil's 2005-06 soy crush to be 29.7 million tonnes. According to the crusher’s association, as stocks from the 2004-05 soy harvest dwindle, so has the Brazilian soy crush, falling in November to 2 million tonnes from October's 2.2 million tonnes. November soy crush totals are the lowest they have been since 2001, when Brazilian crushers processed 1.9 million tonnes of soybeans. Abiove said. Nevertheless, Abiove expects a 2006-07 Brazilian crush of 29.5 million tonnes.
Local demand for soymeal continues to rise, due in part to demand from Brazil's large livestock industry, said Abiove. Meanwhile, soyoil demand remains volatile. Abiove estimates that Brazil's soy industry will profit only slightly better in 2006 because of rising international prices.
India’s Vegetable Oils Tariff Scheme Upsets Domestic Industry
India’s vegetable oils industry has expressed disappointment in the government's decision to cut import tariff values by only between $3 and $24 a tonne. On December 16, the Finance Ministry had issued a notification saying that there would be no revision of the tariff but, following continued demands from the edible oil industry to revise the tariff rates to come in line with the market price, the revision was made on January 2.
Tariff values are prices set by the Finance Ministry in order to calculate customs duties and prevent under invoicing of edible oil imports. India levies 45% import duty on crude soyoil, 65% on crude palm oil and 75% on refined oils.
In effect since January 2, the tariff on refined, bleached and deodorized (RBD) palmolein has been revised downwards by $24 a tonne to $421 a tonne. Values for other palmolein items were cut by $23 a tonne to $420 a tonne. The smallest reduction was for RBD palm oil whose import tariff was cut by $3 a tonne to $432 a tonne, while that for crude soyoil was reduced by $13 a tonne to $497 a tonne.
"The reduction does not reflect the market price; in the international market, crude palm oil is ruling at just $380 a tonne, " said Sandeep Bajoria, chairman of the Central Organization for Oil Industry and Trade. "It is too small a reduction and will have no effect on domestic prices. Prices are more or less likely to rule the same as they were before the reduction." The tariff rate cut has come at a time when vegetable oil imports are showing a tendency to decline. In December, there was a considerable slowdown in India's vegetable oil imports for various reasons, including pressure of domestic arrivals and price disparity.
India's vegetable oil purchases are widely expected to dip this season, which began in November, as the country's edible oil production is projected to rise. India has estimated its domestic oilseed output this year to be 13.37 million tonnes, compared with 12.26 million tonnes last year, while vegetable oil production is seen at 4.85 million tonnes this year against 4.53 million tonnes last year.
U.S. Farmers Urged To Continue To Prepare For Asian Soybean Rust
Soybean experts are telling farmers to continue to be vigilant in preparing to fight the spread of Asian soybean rust."Just because we didn't have soybean rust all the way up into the central part of the United States doesn't mean that it won't eventually get here," said Suzanne Bissonnette, a soybean rust expert with University of Illinois Extension, at the university's annual Crop Technology Conference. "We're in the early stages and I urge you to continue to pay attention to rust."
Because the rust cannot survive the winter cold, some farmers question whether it can migrate to the major soybean-producing states early enough each year to severely affect crop yield. Bissonnette thinks it can. "Considering we just had the initial infection of soybean rust in November 2004, we had pretty significant movement of the pathogen in this season," she said. "I don't think we're crying wolf given the implications of what could happen when the disease gets here."
Soy Complex Lower On Bearish USDA Production And Stocks Report
The soy complex closed significantly lower on January 12 following USDA’s bearish production and stocks estimates as well a surprisingly large increase in USDA's carryout. As big as that increase was, the carryout probably is headed even higher given the poor export outlook. Soybean futures could fall further if South American production is in line with projections that some analysts are terming “conservative” for Brazil if it receives favorable weather for the first time in a number of years. Argentina has received a lot of rain over the past week, which eased concerns about the crop there. January bean futures closed down $4.59 finishing at $206.50; March was $4.59 lower, closing at $210.17; and May lost $4.50 ending at $213.66. January meal was down $2.79, closing at $197.09; March was $2.98 lower, finishing at $197.31; and May decreased $3.53 to finish at $198.97. January oil closed $9.92 lower to finish at $472.45; March decreased $10.14, closing at $478.18; and May lost $9.26, ending at $486.11.
