May 12, 2008

 

ASA weekly: Rebounding US production replenishes low soy stocks

 

The USDA reports that the soy stocks rebound to 5.03 million tonnes from 3.95 million tonnes.

 

Lower beginning stocks were offset by the sharp rise in production to 84.5 million tonnes from 82.3 million tonnes.

 

Demand is expected to remain firm at 54.4 million tonnes with a normal residual loss expected. The residual of 54,400 tonnes for 2007-08 reflects an apparently larger 2007 soy crop, and the estimates will likely be adjusted in September.

 

Oil stocks are expected to decline slightly to 1.22 million tonnes million pounds from 1.27 million tonnes.

 

Bio-diesel demand is expected to rise to 1.45 million tonnes from 1.34 million tonnes.

 

While the market was looking for a smaller reduction in the carryout, analysts expect that USDA will have to boost its export forecast further in the coming months given the record large outstanding export sales.

 

USDA did not make any substantial changes to world numbers for 2007-08 and will not release world figures for 2008-09 until next month.

Conferees complete US farm bill; presidential veto looms

 

US farm bill conferees on May 8 finally completed work on a new farm bill.

 

While conference leaders said they were hopeful President Bush would sign the bill, or allow it to become law without his signature, they added that if a veto comes, they are prepared for an override.

 

Details of the final bill await scores from the Congressional Budget Office. The current extension of the 2002 farm bill expires May 16, which allows enough time for both chambers of Congress to pass the conference report and send it to the president.

 

The last issue that was settled was a change to adjusted gross income levels for wealthy farmers to qualify for federal farm payments.

 

Conferees reportedly considered lowering the cap on farm income to US$750,000.

 

Senator Chuck Grassley of Iowa said the farm bill would bar people with more than US$500,000 in off-farm income or US$750,000 overall from receiving direct payments.

 

Farmers would be able to retain ownership of grain after they receive loan deficiency payments, but those payments would be based on 30-day rolling average prices. Also still in the bill are increases in crop subsidy rates for soy and wheat.

 

Bush administration officials will be hesitant to officially comment on the measure until they see final language.

 

However, most sources say a presidential veto is likely. Keith Hennessey, director of the White House's National Economic Council, said the conference package includes budget gimmicks and timing shifts that mask the measure's true cost.

 

Hennessey said lawmakers have shown little willingness to address White House concerns about some US$18.5 billion in spending built into the broader bill.

 

US soy complex up on weaker dollar and increases in grain markets

 

The US soy complex closed higher on May 8 reflecting a weaker US dollar, higher outside energy and metal markets and higher grain markets.

 

The gains in soy futures however were anemic compared to the double-digit gains in corn and wheat futures.

 

Upside price potential could be tempered by the ongoing delays in corn plantings that are raising concerns that soy will pick up acreage from corn if the delays extend into the latter part of this month.

 

Soy oil futures have minimal downside risk at current energy price levels.

 

May soy futures closed up US$0.37, finishing at US$477.02; July gained US$0.37, closing at US$481.34; and August was up US$1.01, ending at US$479.13.

 

May soymeal increased US$1.43 closing at US$363.54; July was US$1.10 higher, finishing at US$369.49; and August soymeal closed up US$1.21, ending at US$368.06.

 

May soy oil increased US$9.70 to finish at US$1302.48; July was up US$8.60, closing at US$1312.84; and August was US$8.82 higher, closing at US$1319.89.

 

U.S. & South America Soybean/Products Balance
	United States			Argentina			Brazil
	Actual	Estimate	Proj.	Actual	Estimate	Proj.	Actual	Estimate	Proj.
	2005/06	2006/07	2007/08	2005/06	2006/07	2007/08	2005/06	2006/07	2007/08
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 01 May 2008
Country	Commodity	New Sales	Accum. Exports		Country	Commodity	New Sales	Accum. Exports
Canada	Soybeans	0.70	117.30		Mexico	Soymeal	1.20	705.80
China	Soybeans	2.20	11335.60		Nicaragua	Soymeal	3.00	35.30
Colombia	Soybeans	8.00	177.40		Panama	Soymeal	9.00	96.00
Germany	Soybeans	60.20	1044.00		Philippines	Soymeal	2.90	376.70
Indonesia	Soybeans	4.70	842.10		UK	Soymeal	28.40	28.40
Israel	Soybeans	8.70	285.50		Venezuela	Soymeal	60.00	183.10
Malaysia	Soybeans	2.00	56.20		Canada	Soyoil	0.60	22.50
Mexico	Soybeans	12.60	2461.20		Colombia	Soyoil	3.50	42.90
Philippines	Soybeans	0.90	39.60		Mexico	Soyoil	1.60	83.40
Taiwan	Soybeans	18.10	1375.00		Salvador	Soyoil	1.00	8.40
Algeria	Soymeal	25.00	40.20		Venezuela	Soyoil	5.00	22.50
Canada	Soymeal	19.10	765.10
Colombia	Soymeal	21.10	251.80		Export Sales Totals (tmt)
Germany	Soymeal	5.10	51.90		Commodity	Outstanding Sales	Accum. Exports	New Sales
Honduras	Soymeal	1.30	95.60		Soybeans	3,889.30	24,996.60	41.00
Ireland	Soymeal	0.60	46.60		Soymeal	1,362.70	4,706.30	122.20
Japan	Soymeal	1.20	195.60		Soyoil	138.50	810.10	12.00