September 25, 2006
ASA Wants New Farm Bill
The American Soybean Association (ASA) last week testified before the House Ag Committee on the future direction of U.S. farm policy. ASA told the Committee it wants a new Act not an extension of the current law. “Farmers need to make long-term economic decisions, and conditions in agriculture have changed sufficiently in the last four years to justify a comprehensive review of farm policy,” the group said.
In addition, should the current batch of programs be extended, ASA noted, “We believe adjustments are needed in oilseed support levels in the event these programs are reauthorized.” They specifically said: “We believe low oilseed support levels in the 2002 Farm Bill relative to supports for other crops and crop market values could discourage producers from planting oilseed crops.”
ASA called for target prices, loan rates and other support levels to be set closer to recent market values for those crops. Also, they did give support to a revenue-based option, but only if “limited resources prevent addressing our concerns with current oilseed support levels.”
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Administration To Propose New Farm Legislation “With Or Without A Doha Agreement”
Agriculture Secretary Johanns promised a package of reforms to be proposed for a new farm bill that will reflect developments in the Doha Round of trade talks, according to a report from the Bureau of National Affairs. The administration is aiming to prepare its proposed agriculture reforms by January.
Johanns said he would “stand by” his plans to deliver a farm policy through the farm bill that is equitable, predictable, and enforceable, “with or without a Doha agreement.” But how the Bush administration structures its policy proposals within that framework “would certainly be influenced” by developments in the Doha Round, he said.
“Equity requires greater support of those 60 percent of U.S. farmers who currently receive no support whatsoever from farm policy,” Johanns said. “Producers from just five crops in the U.S. receive about 93 percent of the subsidies,” he noted. Unsubsidized farmers were seeking support in areas such as research funding, phytosanitary and sanitary enforcement, and market promotion, he said.
Predictability in farm policy “requires that we help producers to mitigate the inherent uncertainties of the industry,” he said. I believe we can do a better job of providing that predictability to our producers.”
Iowa Begins Process That Could Ban Use Of Manure In Soybean Fields
Iowa’s Environmental Protection Commission is closer to implementing a ban on the spreading of manure on land planted with soybeans, according to a report from Dow Jones Newswires. The commission has instructed the Iowa Department of Natural Resources (DNR) to craft a notice that begins the rule-making process for the ban.
Environmentalists have argued that soybeans don’t need the nutrients provided by manure. They say that its application on soybean fields creates nitrate pollution by leaving too much nitrogen in the soil, which then runs off into the waterways – some of the most nitrogen-rich waters in the world. Some scientists say the fecal bacteria that winds up in rivers and lakes can suck up oxygen, killing fish, and create threats to human health.
Randy Clark, an attorney with the Iowa DNR said the ban would go into effect three years after its approval for existing soybean fields. It remains to be seen whether such a ban would cause many farmers to switch their fields from soybeans to corn.
Tracy Blackmer, director of research for the Iowa Soybean Association, said scientific studies show that soybeans do use the nutrients in manure. State regulators should focus on proper application techniques, not an outright ban, he said. As long as the producer follows the appropriate guidelines, he said, “it is no different than other sound management practices.”
Biodiesel Business Update
Bunge is teaming up with Memphis, Tennessee-based Biodiesel Investment Group to build Illinois’ largest biodiesel plant. The two firms have created a joint venture, Biofuels Company of America LLC, which will build the 45-million gallon per year biodiesel plant adjacent to Bunge’s soybean processing facility in Danville. Construction is underway, with plans for the plant to be operational in the first quarter of 2008.
“Bunge will be able to provide 100% of the feedstock for the new plant as well provide risk management and other services to the new facility,” said Larry Clarke, general manager of Bunge Oilseed Processing.
In other biodiesel business developments, American Biodiesel broke ground on its 30 million gallon facility in east Toledo, Ohio. The company plans to start production by the middle of next summer. In Ohio, there are two biodiesel plants online with a combined production capacity of 31.5 million gallons and another one, with a production capacity of 5 million gallons, is under construction.
Beatrice Biodiesel LLC broke ground on its biodiesel plant in Beatrice, Nebraska. The $52.5 million plant will have a production capacity of 50 million gallons per year, the company reported. The plant is scheduled to start production by fall 2007.
Soy Complex Up On Strong Exports, Fund Buying And Delays In The Harvest
The soy complex closed higher on September 21 reflecting strong export sales, continued fund buying and spillover-strength from corn. Wet weather that has delayed the harvest also boosted prices. The move to 11-session highs sparked more aggressive technical buying and significant fund short-covering in soybeans and meal. December meal broke-out to the upside of a 7-week trading range which added to the bullish tone. However, most of the buying was early and even with continued strong fund and speculative buying in corn and wheat late in the session, meal closed well off of the highs, limiting the soybean support late in the day. Higher energy prices provided some early support for soyoil, but the oil share declined by the end of trading. November bean futures closed up $3.22 finishing at $205.03; January was $3.40 higher, closing at $209.99; and March gained $3.31 ending at $214.03. October meal was up $2.76, closing at $185.52; December was $2.54 higher, finishing at $185.30; and January was up $2.54 to finish at $186.40. October oil closed $3.09 higher to finish at $535.72; December was up $4.19, closing at $544.54; and January increased $4.19, ending at $551.15.
