April 7, 2008

 

ASA weekly: US soy acreage intentions and stocks surpass expectations

 

USDA's March 31 Prospective Plantings and Stocks implied a much more relaxed soy supply outlook for the remainder of this season and that ahead.

 

The stocks estimate of 38.9 million tonnes is below last year, but is 2.04 million tonnes above the pre-report estimate and suggests that the 2007 crop was greatly underestimated.

 

The large 30.3 million hectares planting estimate for 2008 will provide ample production to meet soy needs, with average weather.

 

Furthermore, the task of attracting new Brazilian soy acres is relieved, for this year at least.

 

The adoption of USDA's soy planting intention of 30.3 million hectares results in a 2008-09 balance sheet that is no longer tight.

 

However, analysts believe that soy plantings will be hard-pressed to reach 30.3 million hectares given the huge gains in corn's net revenue advantage over soy since the first two weeks of March when USDA conducted its acreage survey.

 

The drop in 2009 futures toward US$10.00 also calls into question whether Brazil will expand soy area and threatens a reduction in plantings.

 

Such a contraction is seen to have limited impact on 2008-09 US soy exports, but would be positive for 2009-10 US export prospects.

 

The drop in soy complex futures looks to have put biodiesel margins back in the black. Even biodiesel priced comparable to diesel plus the tax credits now appears to be profitable given a breakeven soy oil futures price of 52 cents per pound. Biodiesel producers that have been able to sell biodiesel at a premium to diesel have been profitable for a few weeks.

 

The threat to Brazilian area expansion and the potential for biodiesel production to ramp is expected to provide a longer-term fundamental underpinning for soy complex futures. In the short run, however, soy complex could undershoot those levels as speculative selling runs its course.

Environmental groups see progress in Amazon soy moratorium

 

A moratorium on the purchase of soy from newly deforested areas of the Amazon appears to be keeping grain fields from adding to rain forest destruction, environmentalists and an industry group said.

 

No new soy plantations were detected in any of the 193 areas that registered deforestation of 250 acres or more between August 2006 and August 2007, according to Greenpeace and the Brazilian Vegetable Oils Industry Association.

 

Cargill, Archer Daniels Midland Co. and Bunge Ltd., as well as France's Dreyfus and Brazilian-owned Amaggi, are participating.

 

Paulo Adario, coordinator of Greenpeace's Amazon campaign, said that the results show that soy moratorium is being respected.

 

However, the high prices of soy on the international market are increasing producers' appetites for more land, which creates and important challenge for the companies committed to the moratorium, Adario added.

 

US soy complex higher on speculative buying

 

The soy complex closed up on April 3, reflecting speculative buying on thoughts that soy had gotten too cheap relative to corn.

 

The lower estimates for soy came after the soy market's substantial setback triggered by fund liquidation and the March 31 USDA reports that estimated March 1 soy stocks and US soy planting intentions both above market expectations.

 

May soy futures closed up US$5.14, finishing at US$461.86; July gained US$6.06, closing at US$468.84; and August was up US$5.88, ending at US$465.91.

 

May soymeal increased US$2.43 closing at US$367.29; July was US$1.87 higher, finishing at US$370.59; and August soymeal closed up US$2.76, ending at US$365.41.

 

May soyoil increased US$7.05 to finish at US$1220.69; July was up US$6.61, closing at US$1237.22; and August was US$4.63 higher, closing at US$1241.85.

 

U.S. & South America Soybean/Products Balance
	United States			Argentina			Brazil
	Actual	Estimate	Proj.	Actual	Estimate	Proj.	Actual	Estimate	Proj.
	Jun-05	Jul-06	Aug-07	Jun-05	Jul-06	Aug-07	Jun-05	Jul-06	Aug-07
Soybeans	thousand tonnes
Carryin	6,960	12,229	15,617	174	334	185	1,638	2,252	3,851
Production	83,368	86,770	70,358	40,500	48,800	47,000	57,000	59,000	61,000
Imports	92	246	163	1,013	2,359	2,600	40	108	130
Crush	47,324	49,160	49,941	32,748	37,600	38,100	28,756	30,770	31,800
Exports	25,579	30,428	27,896	7,130	12,208	10,000	24,770	23,805	27,900
Other	5,288	4,040	4,495	1,475	1,500	1,525	2,900	2,934	2,950
Usage	78,191	83,628	82,332	41,353	51,308	49,625	56,426	57,509	62,650
Carryout	12,229	15,617	3,806	334	185	160	2,252	3,851	2,331
Soymeal	thousand tonnes
Carryin	156	285	318	1,686	2,003	2,076	636	863	1,013
Production	37,416	39,033	39,720	25,582	29,153	29,550	22,300	23,850	24,615
Domestic use	30,114	31,171	32,024	574	620	645	10,000	11,500	12,000
Net Exports	7,173	7,829	7,743	24,691	28,460	29,164	12,073	12,200	12,713
Usage	37,287	39,000	39,767	25,265	29,080	29,809	22,073	23,700	24,713
Carryout	285	318	271	2,003	2,076	1,817	863	1,013	915
Soybean oil	thousand tonnes
Carryin	771	1,366	1,317	385	487	350	248	300	301
Production	9,248	9,292	9,614	6,169	7,200	7,320	5,521	5,910	6,105
Domestic use	8,146	8,502	8,573	402	597	1,135	3,172	3,450	3,640
Net exports	507	839	1,071	5,665	6,740	6,160	2,297	2,459	2,450
Usage	8,653	9,341	9,644	6,067	7,337	7,295	5,469	5,909	6,090
Carryout	1,366	1,317	1,287	487	350	375	300	301	316

 

USDA Export Sales (tmt) - Week of 27 March 2008
Country	Commodity	New	Accum.		Country	Commodity	New	Accum.
		Sales	Exports				Sales	Exports
Barbados	Soybeans	1.60	14.60		Trinidad	Soymeal	6.00	25.00
China	Soybeans	240.90	10528.80		Turkey	Soymeal	20.00	68.80
Colombia	Soybeans	6.20	159.00		Venezuela	Soymeal	2.00	179.90
Egypt	Soybeans	6.00	654.00		Algeria	Soyoil	4.50	94.50
Indonesia	Soybeans	21.30	668.60		Canada	Soyoil	1.10	17.70
Japan	Soybeans	59.00	1715.70		Dom. Rep.	Soyoil	10.00	8.20
Mexico	Soybeans	47.50	2137.30		Japan	Soyoil	0.50	1.80
Taiwan	Soybeans	27.00	1219.90		Jordan	Soyoil	7.00	0.00
Thailand	Soybeans	0.90	143.70		Korea, Rep.	Soyoil	4.00	30.80
Turkey	Soybeans	4.10	332.40		Lebanon	Soyoil	5.00	5.20
Vietnam	Soybeans	11.20	42.80		Malaysia	Soyoil	2.00	9.00
Colombia	Soymeal	2.70	217.00		Mexico	Soyoil	11.60	74.90
Denmark	Soymeal	1.30	43.80		Morocco	Soyoil	21.00	69.50
F W Ind	Soymeal	0.70	10.70		Salvador	Soyoil	0.90	8.40
Guatemala	Soymeal	15.10	126.60		Taiwan	Soyoil	3.20	0.10
Guyana	Soymeal	1.50	3.80		Export Sales Totals (tmt)
Indonesia	Soymeal	2.50	71.60		Commodity	Outstanding	Accum.	New
Japan	Soymeal	0.70	163.60			Sales	Exports	Sales
Mexico	Soymeal	29.40	601.60		Soybeans	4,380.50	22,716.00	184.70
Panama	Soymeal	25.30	86.30		Soymeal	1,524.10	3,917.40	90.00
Surinam	Soymeal	1.10	2.80		Soyoil	227.70	6,505.00	55.80