July 10, 2006

 

ASA weekly: US soy plantings, developing countries' role in farm trade up; Brazilian agri minister to resign

 

 

US soy plantings up 4 percent in 2006

 

The 2006 US soybean planted area is estimated at 30.3 million hectares, up 4 percent from last year and the second largest on record, according to USDA. 

 

Area for harvest in the United States is forecast at 29.9 million hectares, also up 4 percent from 2005. Area planted increased or was unchanged from last year in 20 of the 31 major soybean-producing states, USDA said. Summer weather will be crucial to crop development and yields, but the increased plantings provide the potential for large supplies and lower prices next year.

 

Old crop soybean stocks continue dramatically above the 2005 level as of June 1. This will likely keep modest pressure on near-term prices.

 

Developing countries to play increasing role in world farm trade

 

Emerging economic powerhouses including Brazil, China, and India are expected to play an increasingly important role in shaping the future of global agricultural trade, as rising incomes and urbanization lead to major changes in diet and eating habits, according to a joint report released by the Organization for Economic Cooperation and Development (OECD) and the UN's Food and Agriculture Organization (FAO). The report suggests that the developing world will lead to massive shifts in farm trade over the coming decade.

 

Production and consumption of farm products is expanding faster in developing countries than in the industrialized world, according to the report. Rapid income growth in key emerging countries like Brazil, China and India is not only sparking greater demand and corresponding imports for both meat and processed foods, but also for the animal feed needed for their production, according to the report. The US is expected to remain the world¡¯s largest wheat exporter over the coming decade, but the OECD-FAO study suggested that its current market share is likely to fall.

 

The OECD-FAO report suggests that rising energy prices and growing supply concerns will boost interest in biofuels, as a substitute for oil-based fossil fuels, adding further pressure to commodity markets. Governments can be expected to increase subsidies for the production of biofuels from coarse grains and other cereals, as well as from oilseeds and sugar, creating additional demand for these commodities, according to the report. Much of the projected growth in demand for coarse grains will be linked to biofuel production, according to the report.

 

However, very few countries have enough raw materials available at present to produce biofuels that could compete on price with fossil fuels without government subsidies, according to OECD-FAO. The report said: "In only a very few countries is the required feedstock available at prices that would presently allow ethanol and biodiesel production to be competitive with transport fuels from crude oil without government support. But such support can also create market distortions, the nature and level of which need to be well understood before policies are put into place."

 

OECD-FAO warned governments that the global trade in livestock and meat remains vulnerable to animal disease outbreaks in key supplying countries. Future outbreaks of BSE, foot and mouth disease, and avian influenza may challenge markets and affect trading patterns, requiring greater international attention and cooperation, according to the report.

 

Brazilian agriculture minister to resign

 

Brazilian Agriculture Minister Roberto Rodrigues says he is resigning, although the exact date of his departure remains to be negotiated with President Luiz Inacio Lula da Silva. Reuters notes that Rodrigues oversaw record Brazilian farm exports since taking the helm of the Agriculture Ministry in early 2003.

 

On several occasions in the past year or so, Brazil's local media have reported that Rodrigues was on the verge of resigning over frustration with the government's lack of funding for the agricultural sector.

 

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	6,960	1,738	1,911	1,057	3,231	3,268	1,696
Production	66,778	85,013	83,999	33,000	39,000	40,500	51,000	53,000	57,000
Imports	151	152	108	540	721	800	364	408	425
Crush	41,631	46,160	46,811	25,072	29,000	29,300	29,172	29,399	29,329
Exports	23,946	30,011	24,494	6,790	10,000	10,450	19,256	22,798	25,280
Other	3,146	5,093	4,396	1,505	1,575	1,645	2,899	2,783	2,912
Usage	68,723	81,264	75,701	33,367	40,575	41,395	51,327	54,980	57,521
Carryout	3,059	6,960	15,366	1,911	1,057	962	3,268	1,696	1,600
Soymeal	thousand tonnes
Carryin	200	191	155	347	354	1,169	911	753	896
Production	32,953	36,938	36,844	19,807	22,765	23,000	22,330	22,917	23,023
Domestic use	28,590	30,448	30,617	700	850	900	8,099	8,735	9,250
Net Exports	4,372	6,526	6,155	19,100	21,100	22,250	14,389	14,039	13,671
Usage	32,962	36,974	36,772	19,800	21,950	23,150	22,488	22,774	22,921
Carryout	191	155	227	354	1,169	1,019	753	896	998
Soybean oil	thousand tonnes
Carryin	676	488	771	99	74	100	285	293	128
Production	7,748	8,781	9,090	4,513	5,115	5,354	5,579	5,588	5,621
Domestic use	7,651	7,910	8,165	140	145	155	3,054	3,059	3,135
Net exports	285	588	481	4,398	4,944	5,224	2,517	2,694	2,459
Usage	7,936	8,498	8,646	4,538	5,089	5,379	5,571	5,753	5,594
Carryout	488	771	1,215	74	100	75	293	128	155

 

USDA Export Sales (tmt) - Week of 29 June 2006
Country	Commodity	New Sales	Accum. Exports		Country	Commodity	New Sales	Accum. Exports
China	Soybeans	78.00	9346.20		Hong Kong	Soymeal	0.60	14.30
Denmark	Soybeans	7.90	74.30		Jamaica	Soymeal	2.30	78.70
Japan	Soybeans	67.70	2477.80		Japan	Soymeal	10.10	286.30
Mexico	Soybeans	25.50	3025.40		Mexico	Soymeal	39.20	1077.10
Netherlands	Soybeans	62.60	964.90		Nicaragua	Soymeal	0.50	51.30
Singapore	Soybeans	0.20	0.20		Philippines	Soymeal	1.50	397.70
Taiwan	Soybeans	15.60	1537.30		Saudi Arabia	Soymeal	23.50	83.80
Turkey	Soybeans	8.20	533.20		Canada	Soyoil	1.10	24.60
Vietnam	Soybeans	0.70	0.30		Germany	Soyoil	2.00	0.00
Australia	Soymeal	0.50	39.10
Canada	Soymeal	10.50	866.50
Colombia	Soymeal	5.10	271.60		Export Sales Totals (tmt)
Costa Rica	Soymeal	0.70	0.90		Commodity	Outstanding Sales	Accum. Exports	New Sales
Dom. Rep.	Soymeal	2.90	283.80		Soybeans	1,892.60	22,301.90	200.10
Guatemala	Soymeal	8.60	174.40		Soymeal	1,031.60	4,528.50	87.30
Honduras	Soymeal	4.00	94.10		Soyoil	46.80	254.20	19.00

 

Thursday Spot and Futures Prices, 06 July 2006
Item	Location	July	Aug	Sep
Soybeans ($/mt)	Central Ill./Chicago	223.58	225.42	227.99
	FOB Gulf (Basis)	240.12	241.59	242.69
	CIF Gulf Coast (Basis Chicago)	240.12	241.59	242.69
Board Crush Margin	$/mt¡¡	27.65	27.27	26.80
		July	Aug	Sep
Soybean Meal 48%, HiPro ($/mt)	Central Ill./Chicago	193.12	194.56	196.10
	FOB Gulf (Basis)	214.07	214.40	215.94
	West Coast (Basis)	241.62	240.85	242.40
Soybean Meal 44% ($/mt)	Central Ill./Chicago	193.12	194.56	196.10
	FOB Gulf (Basis)	203.04	203.37	204.92
	West Coast (Basis)	230.60	229.83	231.37
Soybean Oil, Crude ($/mt)	Central Ill./Chicago	597.89	600.09	605.38
	FOB Gulf (Basis)	581.35	583.56	588.85
		Beans	Meal	Oil
1 year ago prices	Chicago, $/mt	254.26	236.55	554.56