February 27, 2006
EU Biofuel Policies Likely Will Boost Demand For Oilseeds
Rising demand for biofuels in the EU will provide the impetus for greater imports of oilseeds in the next six years, according to a medium-term market study from the European Commission. Imports of oilseeds are expected to total 19.6 million tonnes this year, climbing 19.9% to 23.5 million tonnes by 2012. Of this, imports for use in bioenergy would rise from 7.5 million tonnes in 2006 to 9.9 million tonnes in 2012. This would mean 42% of imports would be destined for fuel use, compared with 38% currently.
Imports are expected to rise in spite of EU efforts to grow more oilseeds as the higher production will not meet demand, said the report. It put production at 21.7 million tonnes this year from 20.4 million tonnes in 2005, rising to 26.8 million tonnes in 2012. The oilseed growing area is expected to expand to 7.3 million hectares in 2012 from 6.8 million hectares this year. In terms of yields, the EC expects that rapeseed will see the greatest rise, while those of soybeans and sunflower likely will remain stable.
The EC’s recently released biofuels strategy three main aims are to promote biofuel use in the EU and developing countries, increase the use of biofuels by making them more financially competitive and to increase research into new and more efficient fuels.
Demand For Low Linolenic Soybeans Exceeds Supply
U.S. soybean farmers are expected to plant 304,000 hectares of low linolenic acid soybeans this season compared with 64,700 hectares last season, according to Linda Funk, spokeswoman for the Iowa Soybean Promotion Board. Standard soybeans contain about 7% linolenic acid whereas the new varieties contain 1% or 3%. “The demand definitely is there and much greater than our supply at this point,” Funk said.
Meanwhile, Jim Sutter, a vice president of Cargill’s grain and oilseed division, said: “Even with the rising demand, it’s been difficult to get farmers to choose the new varieties. I think there is a reluctance because of a lack of a long history of these things, a fear of the unknown a little bit.” Cargill processed between 11,300 and 13,600 tonnes of the low linolenic acid soybeans last year, and Sutter expects the market will continue to grow.
South Korea Increased Soyoil Imports In 2004-05
South Korea’s soyoil imports increased to 243,647 tonnes in 2004-05, up 15% from the previous year, in order to meet greater demand from the processed oil industry, the wholesale market and the retail market, according to a recent report by the USDA. U.S. soyoil exports to South Korea in 2004-05 were 14,260 tonnes, about 6% of total imports.
Prices for imports were well below those of domestically produced soyoil and helped narrow crushing margins. In response, local production fell about 8% from a year earlier to 177,903 tonnes.
Meanwhile, South Korea’s 2005-06 forecast for soybean imports has been reduced to 1.3 million tonnes, down 250,000 tonnes from the initial projection due to the current state of crushing margins and the above average ending soyoil stock levels of last year.
PAGE TOP Bad Weather Could Hurt Brazil’s Soybean Crop
Dry weather in some regions of the main soy-producing states like Parana likely will cut output in the 2005-06 crop, Gilberto Guarida, an agronomist at Coamo, Brazil’s largest soy cooperative, told Dow Jones Newswires. Coamo’s southwestern Parana farmers were expected to produce roughly 45 60-kilogram bags per hectare in 2005-06, “Now they are looking at 20 bags,” Guarida said. Mostly dry weather persists in the Bahia region and many analysts are expecting to see a production drop there as well.
Rain in top producer-region Mato Grosso also could inhibit the currently ongoing harvest. It should rain in the center-western state over the next two weeks, with most of the rainfall happening in the east, northeast and center-north of Mato Grosso.
A three-month extended forecast from Brazil’s National Weather Service branch in Rio Grande do Sul region of Brazil suggests that above-average south Atlantic water temperatures will bring more rain and cooler temperatures in March and April. That forecast could pose harvesting problems as Rio Grande do Sul starts its 2005-06 soy harvest in March and finishes in May. “Wet weather in April can impede harvesting, so if this forecast ends up being accurate then it will cause problems,” said Joel Burgio, an agriculture meteorologist at U.S.–based Meteorlogix told Dow Jones Newswires.
USDA: FTA With Morocco Could Help Spur Soybean Imports
The Free Trade Agreement (FTA) between Morocco and the United States implemented January 1, 2006 significantly reduces customs duties for soybean meal and soybeans, according to a new report from USDA. In order to conform to its obligations under the WTO Agreement and the U.S.-Morocco FTA, Morocco changed, on January 2, 2006, its mechanism to compute the duty on soybeans that are not imported directly by the crusher and started imposing a flat 44% duty.
Soybeans that are imported directly by the crushers continue to be subject to a flat 2.5% making it feasible only for the crushers to import soybeans, said USDA. Under the U.S.-Morocco FTA, U.S. soybeans imported directly by the crushers have entered duty free since January 1, 2006. Duties paid by other importers are reduced 50% (of the base rate at the signing i.e. 22.5%) the first year and will be completely phased out by equal annual installments over a 5-year period. USDA expects that this will encourage the use of soybeans directly by small processors (especially feed manufacturers) to produce full-fat soybeans and increase the energy content of the rations.
Moroccan imports of U.S. soybean meal are expected to increase in spite of the Avian Influenza outbreaks in Europe and Africa that has already dampened consumption of poultry meat by Moroccans, USDA said.
Soy Complex Mostly Lower
The soy complex closed mostly lower on February 23. March bean futures closed down $0.92 finishing at $209.99; May was $0.64 lower, closing at $214.86; and July lost $0.92 ending at $218.90. March meal was down $1.43, closing at $192.24; May was $1.10 lower, finishing at $194.78; and July decreased $0.22 to finish at $197.97. March oil closed $0.22 higher to finish at $501.77; May was unchanged, closing at $510.14; and July lost $0.44, ending at $518.08.
