February 6, 2006
President Calls For Investment In Biobased Fuel Technology
President George W. Bush warned the United States must break its “addiction” to oil, in his State of the Union address given on February 1. He said the U.S. was too reliant on oil, often from “unstable” countries, and had to find alternatives. However, the Bush Administration’s proposed budget for fiscal 2007 does not fully support his call.
Bush said the nation has “a serious problem” with its dependence on imported oil. “The best way to break this addiction is through technology,” he said, pledging to seek a 22% increase in funding for clean energy research, including nuclear and renewable energy sources such as biofuels. He said he was aiming for a 75% cut in U.S. oil imports from the Middle East by 2025.
The President’s initiatives are open to criticism as press reports indicate that his administration has not fully authorized funding mandated by legislation he signed last year.
Budget details released last week showed that recommended spending by the Bush Administration on major parts of the plan — which includes promoting research on biofuels, solar and wind power, clean coal technology and nuclear energy — is below levels authorized in the Energy Act of 2005 signed in August.
For example, the White House said it will recommend spending $150 million in fiscal 2007 on research aimed at making biofuels more competitive with oil — $59 million more than the current appropriation but about $50 million less than the energy bill authorizes.
Early Asian Rust Discoveries In South Concerns USDA
Asian soybean rust may have successfully over wintered in the South this season, according to the latest report from USDA. Twelve counties across three states in the South (Georgia, Alabama and Florida) have reported rust, just one month into 2006. “Scouting efforts are under way in all states of the Deep South and in Texas,” said USDA.
The first detection of soybean rust in Georgia during 2005 didn’t come until April. Rust has also been found in one county of Alabama, fully five months sooner than was the case in 2005. Florida has also reported 10 rust-positive counties.
Kudzu, the common broadleaf weed found throughout the southeastern U.S., is a primary alternative host of soybean rust. USDA suggests that the extent to which killing frosts cause “kudzu dieback” each winter could become a key factor in determining the annual dispersal of the disease among the U.S. soybean crop.
Abiove Expects Brazil To Have 57.1 Million Tonne Crop In 2006-07
The Brazilian Vegetable Oils Industry Association (Abiove) said last week that the 2006-07 soybean crop could reach 57.1 million tonnes. Soymeal production is likely to be 22.9 million tonnes, according to Abiove.Meanwhile, soyoil output is seen 5.6 million tonnes next year, Abiove said.
Abiove’s soybean export estimate for 2006-07 is 24.5 million tonnes; up from 2005-06 when Brazil exported 22.4 million tonnes. Soymeal export estimates could be 13.4 million tonnes in 2006-07, which would be slightly lower than the 13.9 million tonnes of soymeal exported in the 2005-06 marketing year. Soyoil exports for 2006-07 are estimated by Abiove to be 2.45 million tonnes.
Abiove’s expects Brazil to crush 29.7 million tonnes of soybeans in 2006-07, up from 28.9 million tonnes crushed in 2005-06.
PAGE TOP Brazil Says Domestic Production Could Be 83.9 Million Tonnes In 2014
Brazil’s Agriculture Ministry released a study last week that estimates the country will produce 83.9 million tonnes of soybeans in 2014. The Ministry expects advances in crop technology and farmland expansion to lead to higher soy production. The Ministry also bases its 2014 expansion on growth in livestock feed demand for hogs and poultry.
Elisio Contini, head of strategic planning at the Agriculture Ministry, said domestic consumption would be 51 million tonnes annually beginning in 2014, with exports doubling to 31.7 million tonnes by that time, 54.6% more than Brazil exported in 2005.
India Revises Edible Oil Tariffs Again
India has once again revised its tariff rates for crude soyoil and crude palm oil, although it is expected to have limited effect on the market. The tariff value of soyoil has been reduced by $8 a tonne to $484 a tonne, while crude palm oil not stands at $412 a tonne from $415 a tonne before.
In addition, the tariff value of refined, bleached and deodorized (RBD) palm oil has been cut by $3 a tonne to $427 a tonne and all other palm oils have been cut by the same figure to $420 a tonne. The import tariff value of crude palmolein has been cut by $3 a tonne to $434 a tonne, while RBD palmolein has been cut by the same amount to $440 a tonne. The revised values came took effect on January 31, 2006.
Soy Complex Up On Oversold Conditions And A Boost In The Wheat Market
The soy complex closed higher on February 2 reflecting oversold conditions and a surge in the wheat market. The funds were modest buyers of soybeans and soybean oil, but the oil share was under pressure from a surprising upward revision in December soybean oil stocks. Demand developments are not doing anything to hurt prospects for a record large U.S. soybean carryout, which leads to the assumption that 2005-06 U.S. exports probably will have a hard time USDA’s 25.9 million tonne forecast. The market is apparently factoring in a big risk premium for South America to have a third consecutive crop shortfall. However, that does not seem to be warranted given the current favorable situation in both Brazil and Argentina. March bean futures closed up $1.65 finishing at $214.58; May was $1.65 higher, closing at $219.27; and July gained $1.47 ending at $223.03. March meal was up $0.77, closing at $200.51; May was $1.10 higher, finishing at $203.59; and July increased $1.10 to finish at $207.01. March oil closed $2.87 higher to finish at $483.91; May increased $3.09, closing at $493.61; and July gained $1.98, ending at $501.33.
