February 27, 2006

 

ASA Weekly: EU bio-fuel policies likely will boost demand for oilseeds; bad weather could hurt Brazil's soybean crop

 

 

EU bio-fuel policies likely will boost demand for oilseeds

 

Rising demand for bio-fuels in the EU will provide the impetus for greater imports of oilseeds in the next six years, according to a medium-term market study from the European Commission (EC).

 

Imports of oilseeds are expected to total 19.6 million tonnes this year, climbing 19.9 percent to 23.5 million tonnes by 2012. Of this, imports for use in bio-energy would rise from 7.5 million tonnes in 2006 to 9.9 million tonnes in 2012. This would mean 42 percent of imports would be destined for fuel use, compared with 38 percent currently.

 

Imports are expected to rise in spite of EU efforts to grow more oilseeds as the higher production will not meet demand, said the report. It put production at 21.7 million tonnes this year from 20.4 million tonnes in 2005, rising to 26.8 million tonnes in 2012.

 

The oilseed growing area is expected to expand to 7.3 million hectares in 2012 from 6.8 million hectares this year. In terms of yields, the EC expects that rapeseed will see the greatest rise, while those of soybeans and sunflower likely will remain stable.

 

The EC's recently released bio-fuels strategy three main aims are to promote bio-fuel use in the EU and developing countries, increase the use of bio-fuels by making them more financially competitive and to increase research into new and more efficient fuels.

  

Bad weather could hurt Brazil's soybean crop

 

Dry weather in some regions of the main soy-producing states like Parana likely will cut output in the 2005/06 crop, Gilberto Guarida, an agronomist at Coamo, Brazil's largest soy cooperative, told Dow Jones Newswires.

 

Coamo's south-western Parana farmers were expected to produce roughly 45 60-kilogramme bags a hectare in 2005/06. "Now they are looking at 20 bags," Guarida said.

 

Mostly dry weather persists in the Bahia region and many analysts are expecting to see a production drop there as well.

 

Rain in top producer-region Mato Grosso also could inhibit the currently ongoing harvest. It should rain in the centre-western state over the next two weeks, with most of the rainfall happening in the east, north-east and centre-north of Mato Grosso.

 

A three-month extended forecast from Brazil's National Weather Service branch in Rio Grande do Sul region of Brazil suggests that above-average south Atlantic water temperatures will bring more rain and cooler temperatures in March and April.

 

That forecast could pose harvesting problems as Rio Grande do Sul starts its 2005/06 soy harvest in March and finishes in May. "Wet weather in April can impede harvesting, so if this forecast ends up being accurate then it will cause problems," said Joel Burgio, an agriculture meteorologist at US¨Cbased Meteorlogix told Dow Jones Newswires.

  

Demand for low-linolenic soybeans exceeds supply

 

US soybean farmers are expected to plant 304,000 hectares of low-linolenic acid soybeans this season compared with 64,700 hectares last season, according to Linda Funk, spokeswoman for the Iowa Soybean Promotion Board.

 

Standard soybeans contain about 7 percent linolenic acid whereas the new varieties contain 1 percent or 3 percent. "The demand definitely is there and much greater than our supply at this point," Funk said.

 

Meanwhile, Jim Sutter, a vice president of Cargill's grain and oilseed division, said, "Even with the rising demand, it's been difficult to get farmers to choose the new varieties. I think there is a reluctance because of a lack of a long history of these things, a fear of the unknown a little bit."

 

Cargill processed between 11,300 and 13,600 tonnes of the low-linolenic acid soybeans last year, and Sutter expects the market will continue to grow.

 

South Korea increased soyoil imports in 2004/05

 

South Korea's soyoil imports increased to 243,647 tonnes in 2004/05, up 15 percent from the previous year, in order to meet greater demand from the processed oil industry, the wholesale market and the retail market, according to a recent report by the USDA. US soyoil exports to South Korea in 2004/05 were 14,260 tonnes, about 6 percent of total imports.

 

Prices for imports were well below those of domestically produced soyoil and helped narrow crushing margins. In response, local production fell about 8 percent from a year earlier to 177,903 tonnes.

 

Meanwhile, South Korea's 2005/06 forecast for soybean imports has been reduced to 1.3 million tonnes, down 250,000 tonnes from the initial projection due to the current state of crushing margins and the above average ending soyoil stock levels of last year.

 

U.S. & South America Soybean/Products Balance
	United States			Argentina			Brazil
	Actual	Estimate	Proj.	Actual	Estimate	Proj.	Actual	Estimate	Proj.
	2003/04	2004/05	2005/06	2003/04	2004/05	2005/06	2003/04	2004/05	2005/06
Soybeans	thousand tonnes
Carryin	4,853	3,059	6,954	1,630	2,046	2,181	3,231	2,453	715
Production	66,778	85,013	82,820	33,000	39,000	40,500	50,500	51,000	58,500
Imports	151	152	109	540	530	485	364	400	425
Crush	41,631	46,160	46,811	25,072	27,800	29,100	29,172	28,175	29,675
Exports	23,946	30,011	27,759	6,500	9,800	10,000	19,571	22,180	25,750
Other	3,146	5,099	4,297	1,552	1,795	1,810	2,899	2,783	3,000
Usage	68,723	81,270	78,867	33,124	39,395	40,910	51,642	53,138	58,425
Carryout	3,059	6,954	11,016	2,046	2,181	2,256	2,453	715	1,215
Soymeal	thousand tonnes
Carryin	200	191	155	347	354	560	763	532	200
Production	32,953	36,938	37,116	19,807	21,806	22,900	22,920	22,200	23,395
Domestic use	28,590	30,448	31,116	700	850	950	8,784	8,850	9,250
Net Exports	4,372	6,526	5,928	19,100	20,750	22,050	14,367	13,682	14,050
Usage	32,962	36,974	37,044	19,800	21,600	23,000	23,151	22,532	23,300
Carryout	191	155	227	354	560	460	532	200	295
Soybean oil	thousand tonnes
Carryin	676	488	771	99	74	100	150	93	95
Production	7,748	8,781	9,011	4,513	5,115	5,354	5,258	5,120	5,371
Domestic use	7,651	7,910	8,142	140	145	155	2,710	2,848	2,870
Net exports	285	588	583	4,398	4,944	5,224	2,605	2,270	2,516
Usage	7,936	8,498	8,725	4,538	5,089	5,379	5,315	5,118	5,386
Carryout	488	771	1,057	74	100	75	93	95	80

 

USDA Export Sales (tmt) - Week of 16 February 2006
Country	Commodity	New Sales	Accum. Exports		Country	Commodity	New Sales	Accum. Exports
Bangladesh	Soybeans	0.10	4.70		Egypt	Soymeal	7.00	52.40
Belgium	Soybeans	3.80	165.90		Indonesia	Soymeal	0.40	15.00
China	Soybeans	409.10	7238.00		Japan	Soymeal	4.50	168.40
Colombia	Soybeans	4.70	86.60		Mexico	Soymeal	6.20	551.40
Costa Rica	Soybeans	6.10	115.10		Morocco	Soymeal	10.00	14.40
Cuba	Soybeans	3.00	70.50		New Zealand	Soymeal	0.10	24.00
Denmark	Soybeans	22.50	50.70		Nicaragua	Soymeal	2.60	27.50
Dom. Rep.	Soybeans	2.80	0.00		OPAC Is.	Soymeal	0.10	4.30
Guatemala	Soybeans	1.00	7.20		Philippines	Soymeal	7.30	206.90
Indonesia	Soybeans	1.60	571.50		Salvador	Soymeal	0.30	53.70
Japan	Soybeans	42.80	1441.40		Turkey	Soymeal	5.00	96.40
Malaysia	Soybeans	0.20	119.90		Canada	Soyoil	1.80	11.60
Mexico	Soybeans	6.80	1653.00		Cyprus	Soyoil	0.10	0.10
Netherlands	Soybeans	58.50	768.00		Dom. Rep.	Soyoil	0.10	2.90
Philippines	Soybeans	0.80	55.20		Jamaica	Soyoil	1.30	57.10
Syria	Soybeans	0.70	94.60		Panama	Soyoil	0.10	0.20
Taiwan	Soybeans	28.20	953.50		Salvador	Soyoil	0.10	0.00
Turkey	Soybeans	15.10	297.90
Algeria	Soymeal	5.70	10.70		Export Sales Totals (tmt)
Australia	Soymeal	0.10	13.90		Commodity	Outstanding Sales	Accum. Exports	New Sales
Canada	Soymeal	13.30	435.30		Soybeans	3,543.90	15,690.40	500.30
Colombia	Soymeal	11.10	161.10		Soymeal	1,331.50	2,483.40	77.40
Dom. Rep.	Soymeal	0.90	127.50		Soyoil	88.80	112.80	4.30