June 6, 2005

 

ASA Weekly: US and Brazil discuss soybean subsidies; binding rules adopted on trade of GMOs (Jun 6, 2004)

 

 

US and Brazil to discuss subsidy programmes

 

Trade officials from the US and Brazil will meet in Washington DC, US, on Jun 16-17 to review each country's respective subsidy programmes for its soybean producers. US officials hope that the meeting will prevent, or reduce the chances of, Brazil from filing a WTO case against US soybean subsidies.

 

Since last February, Brazilian soybean growers have been pushing for the Brazilian government to file a case against US's soybean subsidies with the WTO. However, to date, the Brazilian government has not indicated if it would pursue a trade case.

 

Brazilian government officials are monitoring these two situations before making a final decision on a possible WTO case:

1. The Doha Round trade negotiation's developments.
   
   
2. US's reaction towards the results of the Doha Round trade negotiations and other cotton subsidies deemed illegal by the WTO. Some Brazilian officials believe these issues give them leverage on trade policy issues. If Brazilian officials are unhappy about developments in either of the "leverage" topics, a trade case could be filed against U.S. soybean subsidies.  

On the other hand, US has also accused Brazilian government of giving farmers subsidies too, in the form of low-interest loans, tax breaks on soybean exports, and tax breaks and incentives for the purchase of land and equipment.

 

As such, it is also hoping that Brazil will back a US sectoral initiative in the Doha farm trade negotiations, which would result in increased tariff reductions and subsidy cuts on selected commodities. The commodities that US hopes would benefit from this initiative are: oilseeds (including soybeans), beef, pork and poultry.  

 

 

Binding rules on trade of GMOs adopted
 

Representatives of 119 governments, who met last week in Montreal, Canada, have adopted binding rules on accompanying documents for genetically modified agricultural commodities (such as wheat, corn and soybeans) when transported across a country's borders.

 

According to an EU statement, the rules will ensure that only approved GMOs enter the territory of the respective parties.

 

 

Decline in Brazil's soybean exports
 

Brazilian soybean exports totaled 2.3 million tonnes in May, down 14 per cent in the same month last year. This is according to preliminary figures released on June 5 by Brazil's Foreign Trade Secretariat. This number is a decrease from April's 2.7 million tons.

 

Analysts say that one of the reasons for this decline is the Brazilian farmers' decision to hold on to their crops, rather than sell at current low prices. Prices paid to producers have been pushed down by a combination of low international soy prices and a weak US dollar-the Brazilian real has recently hit its highest level against the US dollar in more than three years. Another factor limiting Brazilian soybean exports is the drought in the southern state of Rio Grande do Sul, thus resulting in slashed output in the state by about 70 per cent.

 

Brazil is expected to export 19.1 million tonnes of soybeans in the 2005-06 season (February-January), which is slightly less than the 19.3 million tonnes shipped last year in the same period, according to the Brazilian Vegetable Oils Industry Association.

 

 

Cargill suspends operations at Brazilian crushing plant

 

Cargill announced last week that it would suspend soybean-crushing operations at its Mairinque plant in southeastern Brazil for one month, due to tight crushing margins.

 

According to Cargill, losses brought about by a drought in the south of the country, the farmers' policy of delaying sales due to low prices, and the strength of the local real, have made producing soymeal and soyoil at the plant unviable.

 

The suspension will cut Cargill's Brazilian crushing capacity from 12,200 to 10,000 tonnes per day.

 

U.S. & South America Soybean/Products Balance
	United States			Argentina			Brazil
	Actual	Estimate	Proj.	Actual	Estimate	Proj.	Actual	Estimate	Proj.
	2002/03	2003/04	2004/05	2003/04	2004/05	2005/06	2003/04	2004/05	2005/06
Soybeans	thousand tonnes
Carryin	5,663	4,853	3,059	896	1,630	2,820	681	3,129	4,186
Production	75,010	66,778	85,484	35,500	33,000	39,000	52,000	52,600	53,000
Imports	127	151	136	400	540	350	1,124	350	213
Crush	43,966	41,631	44,906	24,723	24,298	26,842	27,796	29,172	30,215
Exports	28,441	23,946	29,937	8,910	6,500	8,700	19,987	19,571	20,888
Other	3,540	3,146	4,171	1,533	1,552	1,652	2,893	3,150	3,200
Usage	75,947	68,723	79,014	35,166	32,350	37,194	50,676	51,893	54,303
Carryout	4,853	3,059	9,665	1,630	2,820	4,976	3,129	4,186	3,096
Soymeal	thousand tonnes
Carryin	218	200	191	330	347	250	490	763	469
Production	34,666	32,953	35,674	19,486	19,050	21,253	21,950	22,920	23,730
Domestic use	29,380	29,257	30,345	250	260	270	8,750	8,784	9,400
Net Exports	5,304	3,705	5,293	19,219	18,887	20,583	12,927	14,430	14,374
Usage	34,684	32,962	35,638	19,469	19,147	20,853	21,677	23,214	23,774
Carryout	200	191	227	347	250	650	763	469	425
Soybean oil	thousand tonnes
Carryin	1,070	676	488	105	99	74	150	150	93
Production	8,363	7,748	8,509	4,554	4,435	4,947	5,031	5,258	5,448
Domestic use	7,752	7,651	7,847	130	130	145	2,668	2,710	2,785
Net exports	1,005	285	587	4,430	4,330	4,676	2,363	2,605	2,666
Usage	8,757	7,936	8,434	4,560	4,460	4,821	5,031	5,315	5,451
Carryout	676	488	563	99	74	200	150	93	90

 

USDA Export Sales (tmt) - Week of 26 May 2005
Country	Commodity	New Sales	Accum. Exports		Country	Commodity	New Sales	Accum. Exports
Belgium	Soybeans	1.5	326.9		Hong Kong	Soymeal	0.2	6.6
Canada	Soybeans	1.1	335.5		Japan	Soymeal	8.6	243.9
China	Soybeans	24.7	11791.6		Mexico	Soymeal	24.8	701.4
Colombia	Soybeans	4.0	107.2		Panama	Soymeal	1.8	71.6
Cuba	Soybeans	0.1	77.9		Salvador	Soymeal	0.8	75.0
Denmark	Soybeans	18.7	858.8		Vietnam	Soymeal	0.5	3.7
Japan	Soybeans	45.4	2431.2		Canada	Soyoil	10.4	29.6
Mexico	Soybeans	93.6	2585.5		Mexico	Soyoil	1.3	129.1
Philippines	Soybeans	23.5	153.3		Oman	Soyoil	0.1	0.2
Syria	Soybeans	14.2	75.6
Taiwan	Soybeans	2.6	1378.1
Turkey	Soybeans	8.0	564.6		Export Sales Totals (tmt)
Canada	Soymeal	8.8	661.4		Commodity	Outstanding Sales	Accum. Exports	New Sales
Colombia	Soymeal	3.0	157.9		Soybeans	1,561.9	27,675.2	195.7
Ecuador	Soymeal	5.1	29.4		Soymeal	769.7	4,249.4	54.5
Guatemala	Soymeal	1.5	176.5		Soyoil	35.5	351.0	2.0