July 23, 2007

 

ASA weekly: US House Agriculture Committee completes work on farm bill; Iowa biodiesel industry players form own organisation; Low soymeal stocks in South-east Asia; High palm oil prices forcing buyers to switch to other oils
 

 

House Agriculture Committee completes work on farm bill
 

The House Agriculture Committee last week completed its work on the 2007 farm bill. On Jul 18, the committee approved the commodity and conservation titles of the bill, and on Jul 19 completed work on the remaining nine titles.

 

The panel also approved by voice vote the 104-page manager's en bloc amendment dealing with pay caps and Chairman Collin Peterson's other priority issues. That amendment will now be sent to the House Rules Committee, where it will be joined with a proposal by the House Ways & Means Committee that would provide offsets for approximately US$4 billion in additional spending for nutrition programmes.

 

Additionally, the en bloc amendment includes language banning anyone whose three year adjusted gross income exceeds US$1 million from receiving farm programme and conservation payments.

 

The current cap on farm programme payments is US$2.5 million, unless 75 percent of the income is derived from agriculture or agriculturally related enterprises. The approved proposal would also eliminate payments to anyone whose AGI ranges from US$500,000 to US$1 million unless at least two-thirds of that amount is derived from farming.

 

Peterson said adjusting the income cap in this way would save US$226 million over five years. USDA has commented that the ban on those making US$1 million or more would  save US$10 million a year. Agriculture Deputy Secretary Chuck Conner earlier said fewer than 9,600 individuals fall into this income category.

 

Soybean farmers who were worried that their fixed annual payments might be cut are likely winners with this bill. Those payments are about the only type of crop subsidies that farmers are expected to get for the foreseeable future because of the sharp increases in soybean prices brought on by the upsurge in demand for bio-fuels.

 

Although there was talk early on of cutting the fixed payments to fund other programmes, the payments are left intact in the legislation.

 

Peterson and House Speaker Nancy Pelosi are now looking for time on the calendar for the whole House to consider the measure. Earlier, there were indications the proposed legislation could move to the House floor as early as Jul 26. It now appears more likely that the House will begin work on the bill the week of Jul 30, although other pressing House businesses could push consideration past the congressional summer recess and into September.

 

Peterson said he has a general commitment from Democratic leaders for floor time the week of Jul 30, just before the August recess. "It's going to be on the floor, unless something blows up. And it will take about a day," Peterson said. However, Pelosi said, "So much is on the table. I would hope to work on the farm bill. But we'll still have to see how the schedule works out."

 

Players in Iowa biodiesel industry form own organisation
 

Biodiesel producers, marketers and soybean farmers have formed their own organisation, separate from ethanol producers. The Iowa Biodiesel Board will be funded by soybean check-off money collected by the Iowa Soybean Association and by membership dues, said Randy Olson, executive director of the organisation.

 

Olson, who was senior marketing manager at the Iowa Soybean Association, said the board was created by demand from "the entire biodiesel chain" to promote biodiesel and work on industry issues and policies.

 

Iowa has 13 biodiesel plants in production with a capacity to produce 258.5 million gallons of biodiesel a year and three more under construction with a potential capacity of 95 million gallons.

 

Low soymeal stocks in South-east Asia
 

South-east Asia may become a prime import market for soymeal. Indian exports of soymeal are likely to fall to about 3.5 million tonnes in the crop year ending in September from 4.1 million tonnes in the year to September 2006, according to Rajesh Agrawal of the Indian Soybean Processors' Association. The high figures for the previous year are mainly because the country had large carryover stocks then.

 

"Right now, South-east Asian countries have low stocks, whether it be Taiwan, Thailand or Indonesia. The business will continue and there is no problem right now in the exporting of soymeal," Agrawal said. Soybean availability was tightening in those domestic markets as the current season draws to a close, he added.

 

High palm oil prices forcing buyers to switch to other oils
 

Malaysian crude palm oil (CPO) prices are getting so high that producers are seeing buyers switch to other oils. Malaysia's Plantation Industries and Commodities Minister Peter Chin said last week, "Once the prices of CPO and palm olein are too high, there is a tendency for consumers to switch to other oils that are less expensive".

 

In the past, CPO prices were typically lower than those of other oils. "But now the gap is closing. Because of that, there are cases of people switching to their traditional oils in Europe," he added, pointing out that there has been a slight decrease in CPO exports to the EU.

 

In related news, Indonesia may have produced less palm oil than expected in the first half of the year after a drought in 2006 hindered the crop's growth. Derom Bangun, President of the Indonesian Palm Oil Association, said palm oil production did not appear to be on course to produce the previously estimated 17.2 million to 17.4 million tonnes this year and is contributing to currently high prices.

 

U.S. & South America Soybean/Products Balance

	United States			Argentina			Brazil
	Actual	Estimate	Proj.	Actual	Estimate	Proj.	Actual	Estimate	Proj.
	2004/05	2005/06	2006/07	2004/05	2005/06	2006/07	2004/05	2005/06	2006/07
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 12 July 2007

Country	Commodity	New	Accum.		Country	Commodity	New	Accum.
		Sales	Exports				Sales	Exports
Belgium	Soybeans	4.3	228.2		Dom. Rep.	Soymeal	13.8	327.1
Canada	Soybeans	1.3	119.7		Honduras	Soymeal	4.2	109.3
China	Soybeans	5	11010.4		Israel	Soymeal	0.8	69.7
Colombia	Soybeans	2.6	271.8		Mexico	Soymeal	29	1084.7
Egypt	Soybeans	0.9	729.3		Canada	Soyoil	0.7	28.8
Guatemala	Soybeans	1	12.2		Guatemala	Soyoil	0.7	22
Indonesia	Soybeans	5.9	1377.5		Korea, Rep.	Soyoil	11	45
Japan	Soybeans	75.8	2757		Mexico	Soyoil	1.6	76.7
Mexico	Soybeans	22.8	3341
Taiwan	Soybeans	31.1	1678.8		Export Sales Totals (tmt)
Turkey	Soybeans	1.1	528.3		Commodity	Outstanding	Accum.	New
Algeria	Soymeal	14.5	34			Sales	Exports	Sales
Bulgaria	Soymeal	1	6.6		Soybeans	2,005.10	28,325.30	180.9
Canada	Soymeal	17.1	1051.2		Soymeal	1,273.40	5,301.60	101.7
Colombia	Soymeal	8.3	245.4		Soyoil	49.4	458.9	3.1