March 20, 2006

 

ASA Weekly: Argentine soybean production seen at 39.5 million tonnes 2005/06; decline in EU soybean crush expected

 

 

Argentine soybean production seen at 39.5 million tonnes 2005/06

 

Argentina is expected to produce 39.5 million tonnes of soybeans in 2005-06, the Agriculture Secretariat said last week. In 2004-05 Argentina produced a record 38.3 million tonnes of soybeans, according to the Secretariat. USDA forecast Argentina's 2005-06 soybean output at 40.5 million tonnes.

 

Meanwhile, the Secretariat kept its estimate for the planted area of soybeans at 15.2 million hectares. This puts area up 5.6 percent from 14.4 million a year ago. Area is seen up in part because dry weather prevented many farmers from planting corn or wheat and those fields were planted with soybeans.

 

Decline in EU soybean crush expected

 

Expanding EU rapeseed crush is forecast to result in a significant decline in the quantity of soybeans crushed in 2005/06, according to a report from USDA. Reported soybean crush for the 12 months ending in September 2005 shows total EU crush at 14.1 million tonnes, 100,000 tonnes below 2003/04. A further erosion of soybean crush volume is expected in 2005/06 with total soybean crush declining to 13.5 million tonnes, the lowest soybean crush volume in the EU since 1993/94, said USDA.

 

Expanded crush capacity encouraged by the tremendous growth in bio-diesel demand and subsequent increase in EU rapeseed production is expected to divert some soybean processing capacity to rapeseed where crush margins are higher.

 

Proposal would extend bio-diesel tax incentives through 2010

 

Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and Ranking Member Max Baucus (D-Mont.) introduced legislation to extend the bio-diesel tax incentive through 2010, from the current 2008 expiration date. The Grassley/Baucus bill (S 2401) extends alternative energy tax incentives, such as the bio-diesel excise and income tax incentive for bio-diesel and bio-diesel blends. It also gives a one-year extension until 2010 to a tax credit for the cost of installing pumps that offer a 20-percent blend of bio-diesel (B20).

 

Highlights of the Grassley/Baucus bill include:

• Production Tax Credit: Extends the renewable electricity production credit for three years for the following qualified facilities: wind, hydropower, closed-loop biomass, open-loop biomass, geothermal, small irrigation power, landfill gas, and trash combustion. The Energy Policy Act of 2005 provided parity in duration of the credit (10 years) for all qualifying sources of energy. In addition, it allowed pass through of the credit to members of a cooperative. It expires after Dec 31, 2010.
   
• Clean Renewable Energy Bonds: Authorises the issuance of an additional US$800 million of tax-credit bonds per year following the termination of the initial 3-year US$800 million allocation enacted in the Energy Policy Act of 2005 to support renewable investment by municipal power authorities, rural cooperatives and tribes.
   
• Bio-diesel and Alternative Fuel Excise Tax Credit: Extends the bio-diesel excise and income tax credit for bio-diesel, bio-diesel mixtures, and renewable diesel. The excise tax credit amounts to a penny per percentage point of bio-diesel blended with petroleum diesel for "agri-bio-diesel," such as that made from soyoil, and a half-penny per percentage for bio-diesel made from other sources, like recycled cooking oil. It lowers the cost of bio-diesel to consumers in taxable and tax exempt markets.
   
• Credit for Refueling Property: Extends for one-year a 30-percent tax credit, enacted in the Energy Policy Act of 2005, for the cost of installing clean-fuel vehicle refuelling property. Clean fuels include ethanol, hydrogen, and mixtures of diesel fuel and 20 percent or more bio-diesel. It expires after Dec 31, 2010.

The American Soybean Association (ASA) and the National Bio-diesel Board (NBB) praised the legislative initiative.

 

"We are pleased to again see bipartisan Congressional support for bio-diesel," said ASA President Bob Metz. "Senator Grassley and Baucus are building on the success of the bio-diesel tax incentives to help soybean farmers and rural economies as well as America's energy security and environment."

 

Darryl Brinkmann, chairman of NBB, said that bio-diesel and soybean leaders already have seen the results of the bio-diesel tax incentive. Last year, US bio-diesel production tripled to 75 million gallons.

 

"Passage of the tax incentive gave the bio-diesel industry the confidence to grow as we work to keep up with the skyrocketing demand for bio-diesel," Brinkmann said. "Consumers across the nation have benefited because the bio-diesel tax incentive has helped make bio-diesel more cost competitive."

 

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 09 March 2006
Country	Commodity	New Sales	Accum. Exports		Country	Commodity	New Sales	Accum. Exports
Canada	Soybeans	2.00	152.10		Hong Kong	Soymeal	0.10	9.90
China	Soybeans	311.20	8194.20		Jamaica	Soymeal	5.50	51.10
Colombia	Soybeans	1.30	101.20		Japan	Soymeal	8.50	169.20
Egypt	Soybeans	5.40	466.90		Mexico	Soymeal	19.00	645.90
Finland	Soybeans	0.30	17.70		Nicaragua	Soymeal	1.30	30.80
Guatemala	Soybeans	2.00	9.20		Panama	Soymeal	12.40	67.80
Indonesia	Soybeans	0.10	639.80		Philippines	Soymeal	1.60	290.50
Japan	Soybeans	11.40	1671.00		Romania	Soymeal	7.90	7.90
Korea, Rep.	Soybeans	2.50	386.90		Canada	Soyoil	0.90	13.20
Mexico	Soybeans	136.60	1895.10		Lebanon	Soyoil	0.10	0.20
Netherlands	Soybeans	0.80	835.30		Mexico	Soyoil	0.10	66.20
Philippines	Soybeans	0.30	64.30		Salvador	Soyoil	1.00	1.80
Turkey	Soybeans	10.00	297.90
Canada	Soymeal	30.40	497.60		Export Sales Totals (tmt)
Colombia	Soymeal	1.70	188.00		Commodity	Outstanding Sales	Accum. Exports	New Sales
Dom. Rep.	Soymeal	3.90	151.20		Soybeans	2,674.90	17,813.00	381.40
F W Ind	Soymeal	5.30	2.80		Soymeal	1,161.80	2,914.10	93.40
Guatemala	Soymeal	5.50	130.90		Soyoil	105.30	136.60	17.50