February 21, 2007
USDA: Ample world soybean supply; Higher prices temper China soy imports
This month, the US Department of Agriculture trimmed its forecast of 2006-07 US soybean exports by 20 million bushels to 1.1 billion.
Domestic soybean use was unchanged this month, so the revised export forecast raised the 2006-07 ending stocks projection by an equal amount to 595 million bushels. Remarkably, the strength in soybean prices has endured, despite the anticipation of record ending stocks.
Based on recent price movement, the 2006-07 price forecast was raised to US$5.90-$6.50 per bushel from US$5.75-$6.45 previously.
While the market seeks more grain acreage in the US, it also is still encouraging production of oilseeds in the world wherever possible.
Price for soybean oil continued a climb throughout January to its highest level in 3 years.
Despite escalating US soybean oil prices, recent values from Argentina and Brazil have risen even more rapidly. The USDA raised its forecast of US soybean oil exports this month by 50 million pounds to 1.5 billion.
In Brazil and Argentina, soybeans have been faring well on account of abundant rainfall.
Higher export taxes in Argentina reinforce incentives to export soybean products at the expense of more highly taxed soybeans while in Brazil, weaker prices for soybean meal will discourage exports and favour its domestic use.
Soybean imports to China for October-December 2006 were 7.0 million tonnes, down from 7.1 million imported a year earlier. The weak start prompted the USDA to revise its forecast for China's 2006-07 soybean imports down to 31.5 million tonnes.
The demand for soybeans in China has been muted by the rise in import costs and lingering worries over
avian influenza. Higher costs have also deterred China's imports of soybean meal, which are off considerably from a year ago.
With little competition emanating from Australia or anywhere else, Canadian exports will dominate 2006-07 world trade in canola.
For the full USDA report, please click here
