June 12, 2006
Early U.S. 2006-07 Soybean Outlook – Another Large Crop; Record Stocks Likely
U.S. soybean production for 2006-07 is projected at 83.82 million tonnes, USDA said in its latest Supply and Demand Report. Output at that level could mean ending stocks at a record 17.8 million tonnes, up 2.3 million tonnes from 2005-06.
USDA also expects a lower soybean crush for 2005-06, reflecting lower-than-expected domestic soybean meal use in recent months as increased soybean meal exports partly offset reduced domestic use. USDA says that soybean ending stocks for 2005-06 likely will be 15.5 million tonnes.
Global oilseed production for 2006-07 is projected at 389.4 million tonnes, down 0.7 million tonnes from 2005-06, according to USDA. Foreign oilseed production is projected at 294.7 million tonnes, up 0.8 million tonnes from 2005-06. USDA expects global soybean production is projected to be a record 222 million tonnes. Higher yields in Brazil and increased area for Argentina will help push South American production to a record 105 million tonnes, up 3 million from 2005-06. USDA projects the 2006-07 Brazilian crop at 56 million tonnes, up only slightly from the 55.7 million tonnes produced in 2005-06 as higher yields mostly offset reduced harvested area. Argentina soybean production is projected at a record 41.3 million tonnes due to increased area, USDA said.
World soybean trade is projected to reach a record 71 million tonnes, up 7% from 2005-06, according to USDA. China accounts for most of the increase in global trade with imports expected to reach 31.5 million tonnes. Global vegetable oil consumption is projected to rise 5% led by increases for EU-25, China, and India. Global protein meal consumption is projected by USDA to increase 4% in 2006-07 mainly due to gains for soybean meal.
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U.S. Asian Rust Threat Passing
A top expert says the threat of a soybean rust outbreak in the Midwest during 2006 is quickly passing, according to a post on USDA’s official Asian rust Web site. IowaStateUniversity plant pathologist X.B. Yang said that despite outbreaks in some states this year, further spread has not been observed.“This is partly due to the drier-than-normal spring season in the southern regions,” he said. Yang said crop weather computer models suggest that the airborne fungus is unlikely to spread very fast this spring, when more plentiful rains and more moderate temperatures are most conducive to survival of disease spores.
Yang also told USDA that history suggests that a severe outbreak of rust is unlikely in the Midwest this season, assuming the pathogen spreads in similar fashion to that of other airborne plant diseases, which have affected U.S. crops.
Conab: Brazil To Harvest 53.8 Million Tonnes Of Soybeans
Brazil’s 2005-06 soy crop estimate is 53.8 million tonnes, the National Commodities Supply Corp. (Conab) said last week. Conab’s estimates have declined over recent months to reflect dry weather in pockets of Parana and Bahia. Parana is Brazil’s No. 2 soy producing state. Bahia is the largest producer in the northeast and the sixth-largest producer nationwide. Conab also said heavy rains during the harvest period in the center west have contributed to a lower than expected crop. Asian soy bean rust also led to production losses in Mato Grosso, the No. 1 producer.
Conab says Mato Grosso would produce 15.9 million tonnes of soybeans, down from 17.7 million tonnes in 2004-05. Conab said Parana will produce 9.4 million tonnes, compared 9.5 million last year, when drought ruined roughly a third of the state’s crop. No. 3 soy producer Rio Grande do Sul likely will harvest 7.7 million tonnes in 2005-06 soy crop compared just 2.6 million in the 2004-05 crop. Rio Grande do Sul lost more than 75% of its soy crop last year because of dry weather in November 2004 through February 2005.
Brazil planted 22.21 million hectares of soybeans in 2005-06, according to Conab. Yields in the center west were put at 2.424 tonnes per hectare. In the South yields are expected to be 2.202 tonnes per hectare. Producers in the southeast should yield 2.384 tonnes per hectare and Northeast yields were put at 2.428 tonnes per hectare.
In related news, Reuters reported last week that Brazil’s 2005-06 soybean crop loss due to Asian soybean rust disease is estimated at 2.3 million tonnes. In January, the Brazilian agricultural research agency Embrapa estimated losses in 2004-05 at 4.5 million tonnes.
Senate Confirms Susan Schwab As USTR
The Senate on June 8 approved by voice vote the nomination of Susan Schwab as the new U.S. Trade Representative (USTR). The vote had been delayed by a hold placed by Sen. Charles Schumer (D-N.Y.). Schumer had criticized Schwab for not being aggressive enough on China trade policy. He was particularly concerned that she would not be tough enough in pressing China to open its markets to US financial institutions. But after meeting Schwab on June 7, Schumer lifted his hold and said she had convinced him that she will be “a very strong voice on opening markets.”
Schwab replaces Rob Portman, a former Ohio Republican representative (1993-2005) who was confirmed as director of the Office of Management and Budget May 26. Schwab was widely supported in the Senate, and no senator insisted on a roll call vote. “I am eager to move ahead with our bilateral and multilateral efforts to realize the president’s vision for free and fair trade,” Schwab said in a statement.
Soy Complex Lower On Slow Economy And General Decline In Commodity Markets
The soy complex closed lower on June 8 as fund selling weakened commodity markets. Weakness in the metal markets, energy prices and some concerns that the world economy is slowing and money mangers are shifting out of the commodity area helped to pressure the market early. But, a recovery in the stock market and in wheat helped ease the selling pressures late There was little in the June 9 S&D reports that was bullish for soybeans. However, soybeans could be pulled higher by wheat with its smaller-than-expected winter wheat crop and USDA’s reduction in the 2005-06 corn carryout because of increased exports. July bean futures closed down $3.40 finishing at $215.96; August was $3.22 lower, closing at $218.62; and September lost $3.31 ending at $221.01. July meal was down $2.20, closing at $198.52; August was $2.20 lower, finishing at $199.30; and September decreased $2.31 to finish at $199.63. July oil closed $6.61 lower to finish at $543.43; August was down $6.83, closing at $547.84; and September lost $7.28, ending at $552.03.
