March 13, 2006
USDA Expects Lower Soybean Imports From China And EU
U.S. soybean production in 2006-07 is expected to be 84 million tonnes with the yield expected to be 2.91 tonnes/hectare, according to USDA’s latest S&D report. Planted area likely will be 29.2 million hectares. USDA projects U.S. soybean ending stocks for 2005-06 are expected to be 15.4 million tonnes, due to reduced soybean exports. Exports are projected at 24.5 million tonnes, reflecting lower imports for China and EU. USDA also said lower domestic soybean meal use likely will be offset by soybean meal exports. Soybean oil sales remain weak despite abundant soybean oil supplies and as a result, soybean oil stocks are estimated to be 1.22 million tonnes, the highest since 2000-01.
Global oilseed production for 2005-06 is projected at a record 393 million tonnes, up 12.7 million tonnes from 2004-05, USDA said. China soybean production is expected to be 18.3 million tonnes based on increased area and yield. USDA did not alter its forecasts for Brazilian and Argentine soybean production. It left those unchanged in the March supply and demand report. USDA forecast for Brazilian soybean production remains stable at 58.5 million tonnes and the forecast for Argentine production remains the same at 40.5 million tonnes.
House Ag Committee Farm Bill Hearing Focuses On Exports
The House Agriculture Committee held its third farm bill field hearings last week in Nebraska. During the course of the hearing, ranking member Collin Peterson (D-Minn.) worried about agricultural imports. “We don’t want to get into the same position with food that we’ve gotten into with oil,” said Peterson. “If the trend continues, we will be close to being a net importer of agricultural products,” Peterson said.
In a statement issued by the committee, Rep. Tom Osborne (R-Neb.) said WTO negotiations are hanging over consideration of a new farm bill “and there is considerable concern as to how quickly a new farm bill can be written while these WTO concerns are out there.” However, Osborne, who will run for governor of Nebraska this November, added: “I think we need to go ahead with the farm bill and try to shape the WTO negotiations as best we can rather than be in a reactive mode.”
Soybean Industry Pushes Biodiesel Tax Incentives In Iowa
Soybean industry advocates last week made a pitch for new tax incentives for the use of soy diesel. A measure that would create new tax incentives for the use of soy biodiesel is sitting in the Iowa House Ways and Means Committee, and advocates say they are worried that soy-based fuels are taking a back seat in the Legislature’s debate over alternative fuels.
Corn-based ethanol has captured most of the attention, with the main debate focusing on whether the state should require all fuel sold in the state to be mixed with 10 percent ethanol or if incentives should be approved to increase access to E85, an 85 percent ethanol blend. There are currently four plants in the state producing soy diesel, and House Speaker Chris Rants said lawmakers have no intention of limiting the debate to ethanol.
PAGE TOP Weather Factors Lower Brazil’s 2005-06 Crop
The Brazilian Census Bureau (IBGE) said last week that Brazil likely will harvest roughly 57 million tonnes of soybeans in 2005-06, down 2.5% from January’s estimate of 58.5 million tonnes. IBGE said that dry weather and poorly distributed rainfall in Bahia, Minas Gerais, Mato Grosso do Sul and Parana states contributed to overall crop reductions.
Bahia’s crop estimate was reduced to 1.9 million tonnes; Minas Gerais region is now expected to produce 2.6 million tonnes; and Mato Grosso do Sul production fell to 4.6 million tonnes from the 5.2 million tonnes IBGE estimated in January. Production also fell in Parana due to dry weather conditions in the southwest mainly. Parana is expected to harvest 9.9 million tonnes of soybeans in this 2005-06 season, compared to IBGE’s January estimate of 10 million tonnes.
However, the top producing state, Mato Grosso, saw a slight increase in soy production estimates in February, rising to 17.5 million tonnes from the 17.4 million IBGE estimated in January. Rio Grande do Sul, remained at the January estimate level of 8.2 million tonnes.
No EU-Wide Rules For Biotech Crops
The EU last week backed away from trying to establish bloc-wide laws on segregating genetically engineered crops, even though regulators fear some EU countries are imposing unfair rules. EU regulators say the situation for each crop in each country is too complex to make one standard rule, though they could revisit the issue later.
Meanwhile, The European Food Standards Authority (EFSA) also came under fire from EU ministers for failing to give clear and full reasoning on why it approves certain GMOs. There was criticism that its decisions and studies were not seen to be objective, and that it would be preferable if non-governmental organizations and independent scientists could give input into decisions as well. It was also deemed unfair that a company seeking approval for its product should be the same company that supplied the scientific data on its safety.
The Commission was quick to defend EFSA, with Environment Commissioner Stavros Dimas explaining it had only relatively recently been established, and was still finding its feet. The body was subject to an ongoing review throughout this year, he added.
Soy Complex Higher On Exports And Support From Outside Commodity Markets
The soy complex closed higher on March 9. Strength in the outside commodity markets including gold and energy helped support prices and the positive export data helped push prices higher as well. Meanwhile, heavy rains across the central U.S. have limited buying support and brought much needed moisture to relatively dry soils. March bean futures closed up $1.56 finishing at $211.83; May was $1.38 higher, closing at $215.96; and July gained $1.75 ending at $220.37. March meal was up $0.77, closing at $190.15; May was $0.55 higher, finishing at $191.69; and July increased $1.76 to finish at $195.00. March oil closed $3.53 higher to finish at $523.59; May was up $3.31, closing at $530.65; and July gained $2.87, ending at $539.47.
