August 28, 2006
***NOTE: The Soy Export Weekly Update Will Not Be Published Next Week During The Labor Day Holiday…Publication Will Resume The Following Week***
U.S. Biodiesel Notes
Illinois will offer $25 million in grants and other aid to companies building ethanol and biodiesel plants in the state, Governor Rod Blagojevich announced recently. The governor said he wants to use biofuels to meet half the state’s fuel needs by 2017.
The Illinois Farm Bureau welcomed Blagojevich’s plan as “great news for Illinois farmers.” However, a spokeswoman for Blagojevich noted that legislators would have to approve borrowing money for the plan. The governor also faces challenges in winning support for a proposal questioned for its price tag and uncertainty over how readily consumers will buy into biofuel technology.
Of particular interest to the soybean sector, Blagojevich announced that the Biofuels Company of America, LLC in VermilionCounty will receive $4.8 million in grants to construct a $30 million biodiesel plant with a production capacity of 45 million gallons of biodiesel per year. The plant will process soyoil.
Stepan Company in WillCounty is receiving $3 million for a $24 million expansion of its existing biodiesel plant near Elwood which will boost production capacity to 49 million gallons per year from 10 million gallons. The plant will process about 35 million bushels of soybeans per year.
In other biodiesel news:
- Cargill and the Missouri Soybean Association announced plans for a 3 million gallon biodiesel plant next to Cargill’s existing soybean processing facility in Kansas City, Missouri. The facility will be jointly owned by Cargill and Paseo Biofuels, LLC, a new entity to be formed by Missouri soybean farmers and MSA. Construction is planned to start this fall, with biodiesel production projected to commence in the summer of 2007. Paseo Biofuels plans a statewide, $24 million equity drive that would make the facility majority-owned by Missouri soybean farmers.
- Prairie Pride Inc. broke ground on its $90 million soybean crush and biodiesel facility in Nevada, Missouri. The company will process some 21 million bushels of soybeans into soybean meal and oil and then refine the oil into 30 million gallons of biodiesel.
- Oilseed processor Bunge North America took a minority stake in biodiesel producer Renewable Energy Group Inc. (REG). As part of the relationship, Bunge North America will supply REG with raw material, risk management and logistics expertise. REG operates a 12 million gallon plant in Ralston and a 30 million gallon facility in Wall Lake, Iowa. The company had previously announced that it plans to build 12 biodiesel plants, five of which in Iowa, and aims to produce 640 million gallons of biodiesel annually by 2009. REG raised more than $100 million of equity investment for the projects.
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Brazil’s Farm Sector Struggling
Brazil’s farm and food industry, which powered the country’s exports and economic growth over the past decade, may be running out steam, analysts said last week. The strength of the Brazilian currency against the dollar has dampened export earnings while farmers have been squeezed by rising production and freight costs as well as escalating debts.
As a result many analysts are expecting a decline in Brazil’s soybean production next year. Brazil’s 2006-07 soybean crop has been forecast as low as 52 million tonnes compared with 54.8 million tonnes in early 2006 as dry conditions in Mato Grosso and several other central areas are causing serious concern. Also, financial problems for Brazilian farmers, the resistance of banks to give more credits and sharply rising production cost (mainly a result of fungicide prices) will also contribute to the decreased production.
IllinoisScientistsSayState Has Avoided Soybean Rust For Third Straight Year
The Associated Press reports that Illinois farmers can put aside their worries about Asian soybean rust for another year, USDA said last week. The disease has been confirmed in six southern states this summer, but drought conditions in that region helped keep the disease confined, said Glen Hartman, who works at the National Soybean Research Laboratory in Urbana, Ill. Yet he cautioned farmers attending that they should not let down their guard. “Every year will be different. The patterns are going to be different,” Hartman said. “We can’t sit back and say, ‘Well, two years now and we haven’t seen anything.’”
Freight Price Indices Mostly Higher
Freight transportation costs hit new records for inland towing and rail during July on an index basis according to the Bureau of Statistics Producer Price Index (PPI). Inland towing costs during July were up 13% year-over-year to an index of 193. Rail costs were up 10% from the previous July to an index of 154. While the trucking index pulled back from June to an index of 130 during July, it was still reported as being up 4% year-over-year. Most of the other components of the PPI were much softer giving an impression of steady inflation.
Soy Complex Mostly Lower On Expectation For Increase Of Production And Yield Forecast
The soy complex closed mostly lower on August 24 reflecting traders’ views that the market is oversold and that fund traders could soon take profits on their enormous net short position. However, analysts also believe that USDA likely will raise its yield and production forecast in the next production report. Also, near ideal August weather has left traders reluctant to be aggressive buyers. Meanwhile, forecasters say the Midwest could receive significant rain amounts in the coming days and a lack of any major shift in temperatures from normal is potentially bearish. September bean futures closed down $0.28 finishing at $202.64; November was $0.55 lower, closing at $207.60; and January lost $0.46 ending at $212.38. September meal was up $2.31, closing at $178.35; October was $2.54 higher, finishing at $179.23; and December was up $2.43 to finish at $181.66. September oil closed $11.90 lower to finish at $550.71; October was down $11.46, closing at $554.68; and December decreased $11.02, ending at $564.16.
