July 18, 2006
U.S. Production Pegged At Nearly 82 Million Tonnes
U.S. soybean production is projected by USDA to be 81.9 million tonnes. U.S. oilseed production is projected at 91.8 million tonnes as reduced soybean, sunflowerseed, cottonseed, and peanut production are only partly offset by a small increase in canola production, according to USDA. Lower production and reduced carryin leave 2006-07 soybean ending stocks at 15.2 million tonnes. Meanwhile, USDA expects U.S. oilseed ending stocks for 2006-07 to be 16.6 million tonnes.
U.S. soybean crush for 2005-06 is projected at 46.8 million tonnes. USDA increased its crush estimate because of stronger-than-expected soybean meal export shipments and sales through June. U.S. soybean exports for 2005-60 should reach 24.6 million tonnes. U.S. ending stocks for 2005-06 are projected at 14.8 million tonnes, USDA said.
Global oilseed production for 2006-07 is forecast to reach 386.7 million tonnes with foreign production accounting for 294.9 million tonnes. USDA says Brazil’s soybean crop is estimated at 55 million tonnes based on lower yields recently reported by the Government of Brazil.
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Biodiesel From Soybeans More Usable And Better For Air Quality
Biodiesel produced from soybeans produces more usable energy and reduces greenhouse gases more than corn-based ethanol, making it more deserving of subsidies, according to a study being published this month in The Proceedings of the National Academy of Sciences. The study, done by researchers at the University of Minnesota and at St. Olaf College in Northfield, Minn., points to the environmental benefits of the biodiesel over ethanol made from corn, stating that ethanol provides 25 percent more energy a gallon than is required for its production, while soybean biodiesel generates 93 percent more energy.
The study concludes that the future of replacing oil and gas lies with cellulosic ethanol produced from low-cost materials like switch grass or wheat straw, if it is grown on agriculturally marginal land or from waste plant material. Indeed, the study found that neither ethanol nor biodiesel can replace much petroleum without having an impact on food supply. If all American corn and soybean production were dedicated to biofuels, that fuel would replace only 12 percent of gas demand and 6 percent of diesel demand, the study notes.
In related news, the International Energy Agency (IEA) said July 12 that global biofuel production will climb to 1.2 million barrels per day (bpd) in 2011, almost double 2005 production of 650,000 bpd and four times larger than output in 2000. “This could still be an understatement of biofuels growth,” the IEA emphasized.
The IEA said a study of proposed or existing projects already suggests a potential increase of 1 million bpd in ethanol and biodiesel supplies between 2006 and 2011.”While there are numerous uncertainties regarding medium-term supply projections for biofuels, there is no doubt that capacity will continue to increase rapidly over the next few years given the current political and economic environment,” the IEA said.
The IEA predicts that European biodiesel production, based on announced construction and capacity expansion plans, will more than double by 2008 from the 64,000 bpd produced in 2005. European ethanol output is also expected to rise to 71,000 bpd in 2008 from just 14,000 bpd in 2005.
Due to uncertainties regarding the relationship between biofuels and food prices as well as oil prices, IEA said that “the current economic attractiveness of biofuels could change very rapidly.” The agency also holds a fairly conservative biofuel expansion view after 2008, citing that Brazil, which primarily derives ethanol from sugarcane, has production advantages to allow its industry to grow further as the nation’s production will like stay more constant.
Letter To Senate Ag Committee Calls For Rail Issues Hearing
Twelve farm organizations, including the American Soybean Association, sent a letter to the Chairman and Ranking Member of the Senate’s agriculture committee requesting it hold a hearing on agricultural rail issues. The letter reads, in part: “As you know, the agriculture industry depends heavily on a strong and financially viable railroad system. However, since the passage of the Staggers Act of 1980, the degree of rail captivity in agriculture has increased dramatically, and America’s farmers continue to experience both unreliable service and higher rates from the railroads.
“We ask that you consider holding a hearing on agriculture shipper issues in the near future to allow producers to discuss the current situation and examine possible remedies. A hearing would give your committee the opportunity to learn more about this problem and some possible solutions to it. Improving shipping conditions for agricultural producers is essential to the continued functionality and growth of the agriculture industry.”
Other organizations signing the letter included: American Farm Bureau Federation; National Association of Wheat Growers; National Barley Growers Association; National Corn Growers Association; National Farmers Union; National Rural Electric Cooperative Association; National Sorghum Producers; North American Millers Association; The Fertilizer Institute; USA Dry Pea and Lentil Council; and USA Rice Federation.
Steady Fuel Pricing Leads To Unchanged Fuel Surcharges
Fuel surcharges among the Class I railroads will be unchanged for August from July, averaging 17.8% per tariff car for all railroads. Fuel surcharges do vary by railroad however, with CSX Transportation, the Kansas City Southern, and the Norfolk Southern each reporting 19.2% while the BNSF Railway and Union Pacific reporting 16.5%, the Canadian National will report 12.8% for August and the Canadian Pacific 21.2%. The Norfolk Southern did implement a new fuel surcharge procedure effective July 1.
Soy Complex Mostly Lower On Better Weather In The Western Corn Belt
The soy complex closed mostly lower on July 13 reflecting the perception that the weather outlook is less threatening for the western Corn Belt. A lack of interest after the early break and a collapse in the wheat pit helped hold futures down into the close to close at the lowest level since July 5th. July bean futures closed down $2.06 finishing at $219.50; August was $2.50 lower, closing at $220.53; and September lost $2.54 ending at $223.25. July meal was down $2.76, closing at $188.49; August was $3.20 lower, finishing at $189.71; and September was down $3.20 to finish at $191.14. July oil closed $1.54 higher to finish at $597.89; August was up $1.76, closing at $599.87; and September increased $1.54, ending at $605.38
