June 11, 2007

 

ASA weekly: China plans new rules on soy, soymeal imports; Asian rust threat for US likely limited in 2007; South American May soybean exports disappointing; Researchers develop easier method for producing bio-fuels from crops; Concern over direction of farm bill 

 

 

China plans new rules on soy and soymeal imports

 

China plans to introduce a new reporting regulation on imports of the oilseed in a bid to make the trade more transparent and avoid large swings in inflows of the commodity.

 

The draft regulation, issued by the commerce ministry on its website, requires buyers to report purchases of soy or soymeal within 72 hours of signing contracts. The rule might be expanded to include other farm products, according to the regulation. It gave no other details and the ministry did not say when the rule would take effect.

 

The draft rule stipulates importers must report details of the trade, including dates of cargo departure and arrivals. If importers fail to report cargoes on time or make false reports, they would be given warnings or face fines of up to RMB50,000 (US$6,545). Additionally, the ministry would suspend trade of severe violators for one to three years, it said.

 

Asian rust threat for US likely limited in 2007

 

Asian soybean rust has been slow to spread in the United States this year with discoveries so far limited to the same five Gulf Coast states (Florida, Georgia, Alabama, Louisiana and Texas) where rust was found early in the growing season last year.

 

Dry conditions in the south-east look to hamper the limited capability that rust has exhibited to spread into the Corn Belt. While soybean rust was found last year in the major producing states of Illinois, Indiana, Missouri and Arkansas, it was not found until October when the soybean crop was essentially mature.

 

With June already here and rust still confined to the far southern reaches of the United States, it looks as if rust will fail to materially impact US soybean production again this year.

South American soybean exports disappointing again in May

 

South America has been in no hurry to export its record production, as exports of soybeans were disappointing for the second consecutive month. Brazil's soybean exports during May are preliminarily estimated at 3 million tonnes, 0.3 million tonnes below May of last year. Brazil, with a crop that is estimated to be 2.6 million tonnes bigger than last year, has exported 1.25 million tonnes fewer soybeans from February to May than last year.

 

Argentina is thought to have exported about 1.5 million tonnes of soybeans during May, 0.1 million tonnes above last year's exports that were constrained by an increase in crush that outstripped the increase in domestic soybean crop output.

 

Despite another sharp increase in Argentina's crush, this year's record soybean crop should allow Argentina to have a bigger export surplus in 2007. Although both Argentina and Brazil have much larger exportable surpluses this year, there has not been a commensurate increase in world import demand.

 

In fact, sales of soybean and soymeal by major exporters the past four months have been no bigger than last year. As such, South American supplies at the start of the 2007/08 US marketing year are forecast to be 10.4 million tonnes larger than the previous year.

 

DOE researchers develop easier method for producing bio-fuels from crops

 

The Bureau of National Affairs (BNA) reports that researchers at the Department of Energy have developed a faster, easier method of finding more cost-effective and sustainable crops for producing bio-fuels.

 

According to a news release, a new technique called Raman imaging will help researchers study plant cell structure to determine which crops offer the right combination of cell wall composition and degradation to maximise the plants' conversion to ethanol.

 

BNA notes that USDA scientists recently identified genetic fragments from switchgrass that could help them develop varieties of the crop that can be processed into bio-fuels more efficiently. At least 12 genetic fragments were associated with genes that regulate the production and deposition of lignin, according to the news service.

 

Johann concerned with direction of farm bill

 

USDA Secretary Mike Johanns is concerned about the direction of the current farm bill being written in Congress. Contacts confirm Johanns called together US farm and commodity organisation representatives last week to express "concern" about the direction the new farm bill is taking in Congress, specifically talk of moving money from direct payments to other categories.

 

Johanns' main concern is that lawmakers appear to be pursuing a path that would redirect money from the direct payments - which currently fall in the WTO's "green box" - into more amber-box payments, which would subject them to potential WTO challenges.

 

In the session with farm/commodity representatives, Johanns did not specifically say "veto" relative to any farm law that follows what the administration feels to be the current path in Congress. However, sources said he did say it would "be difficult" for him to recommend US President Bush sign a bill that would make the aforementioned shifts in payments.

 

Going this route would "paint a bull's-eye on the back of the American farmer" in terms of opening up potential WTO challenges, Johanns told the representatives. "This certainly gives the impression the administration is getting increasingly concerned that a new US farm bill designed the way that it appears lawmakers are heading would up the odds of additional successful challenges of US farm law via the WTO," a contact said of the session.

 

Contacts advise that if direct payments were taken away and the dollars kept in the commodity title and they were kept budget neutral, it would amount to an increase in loan rates of some 30 percent.

 

If the US experienced another year like 2005, which saw hefty, loan deficiency payments made to farmers and there were no direct payments, the payouts to farmers would tally about US$28 billion.

 

U.S. & South America Soybean/Products Balance
	United States			Argentina			Brazil
	Actual	Estimate	Proj.	Actual	Estimate	Proj.	Actual	Estimate	Proj.
	May-04	Jun-05	Jul-06	May-04	Jun-05	Jul-06	May-04	Jun-05	Jul-06
Soybeans	thousand tonnes
Carryin	3,059	6,960	12,229	2,434	514	579	3,598	1,638	2,252
Production	85,013	83,368	86,770	39,000	40,500	45,500	53,000	57,000	58,800
Imports	152	92	109	708	900	725	352	40	100
Crush	46,160	47,320	48,036	29,560	32,600	37,150	29,728	28,756	29,400
Exports	30,011	25,778	29,393	10,548	7,200	7,550	22,799	24,770	26,700
Other	5,093	5,093	4,951	1,520	1,535	1,516	2,785	2,900	2,974
Usage	81,264	78,191	82,380	41,628	41,335	46,216	55,312	56,426	59,074
Carryout	6,960	12,229	16,728	514	579	588	1,638	2,252	2,078
Soymeal	thousand tonnes
Carryin	191	156	285	564	671	564	841	640	894
Production	36,936	37,414	37,939	23,347	25,687	29,250	22,928	22,327	22,800
Domestic use	30,446	30,097	30,527	538	544	550	9,121	10,000	10,644
Net Exports	6,525	7,188	7,425	22,702	25,250	28,700	14,008	12,073	12,215
Usage	36,971	37,285	37,952	23,240	25,794	29,250	23,129	22,073	22,859
Carryout	156	285	272	671	564	564	640	894	835
Soybean oil	thousand tonnes
Carryin	488	771	1,370	91	35	32	293	248	250
Production	8,781	9,250	9,069	5,404	6,000	6,850	5,708	5,521	5,625
Domestic use	7,910	8,144	8,505	378	428	683	3,059	3,222	3,335
Net exports	588	507	667	5,082	5,575	6,166	2,694	2,297	2,292
Usage	8,498	8,651	9,172	5,460	6,003	6,849	5,753	5,519	5,627
Carryout	771	1,370	1,267	35	32	33	248	250	248

 

USDA Export Sales (tmt) - Week of 31 May 2007
Country	Commodity	New	Accum.		Country	Commodity	New	Accum.
		Sales	Exports				Sales	Exports
China	Soybeans	0.3	113.8		Hong Kong	Soymeal	0.4	13.7
China	Soybeans	1.8	10770.9		Japan	Soymeal	2.1	254.3
Cuba	Soybeans	72	128.3		Jamaica	Soymeal	0.7	71
Indonesia	Soybeans	20.9	1145.3		Mexico	Soymeal	10.8	933.6
Japan	Soybeans	29.6	2418.9		Nicaragua	Soymeal	3.6	44.3
Mexico	Soybeans	14.9	2943.7		Philippines	Soymeal	15.5	301.2
Netherlands	Soybeans	10.3	1409.3		Canada	Soyoil	0.2	24.4
Philippines	Soybeans	0.4	61.9		Guatemala	Soyoil	1.5	19.3
Spain	Soybeans	6.5	368.7		Mexico	Soyoil	0.5	55.6
Taiwan	Soybeans	17.2	1507.6		Trinidad	Soyoil	0.2	3.7
Turkey	Soybeans	18	489.6		Export Sales Totals (tmt)
Canada	Soymeal	3.5	885.2		Commodity	Outstanding	Accum.	New
Colombia	Soymeal	2	194.5			Sales	Exports	Sales
Cuba	Soymeal	50.5	85		Soybeans	2,391.80	26,600.70	200.1
Dom. Rep.	Soymeal	1.5	304.5		Soymeal	1,539.60	4,619.80	127.4
Guatemala	Soymeal	35.6	231.8		Soyoil	41.8	369.6	2.5