September 10, 2007

 

ASA weekly: China will not impede soybean imports; September/November US agricultural exports expected to be good

 

China will not impede soybean imports

China's government said it would not interfere in soybean imports and tougher inspection standards would have no long-term impact on the volume of purchases, according to statements made to the publication The Public Ledger.

"There may be some short-term effect, but after the exporters adjust to the tougher quality standards, I expect trade to return to normal," Huang Hai, Assistant Minister of Commerce, said last week.

On Aug 22, China said that it found "substantial" quality-related problems with imports of US soybeans and urged the United States to investigate and improve its export procedures. The comments followed US reports of unsafe Chinese products, including toys, fish and vegetables, which helped stoke trade friction between the two countries.

Demand for livestock feed, as rising incomes boost meat consumption, has raised China's need for soybeans in recent years. China's soybean imports have almost doubled since 2003/04. Imports from January to July rose by 2.6 percent to 16.9 million tonnes, with 7.8 million tonnes from the United States, according to China's customs data.

Closer monitoring is a reaction to increased global attention to food quality and that trend would probably continue, Huang told the Public Ledger. Still, increased inspections would not lead to "greater restrictions on soybean trade given the large quantities China imports".

Huang added that the government would not get involved in decisions about where soybean imports come from. "The majority of China's soybean imports are handled by Sino-foreign joint ventures. The processors will choose where to source their imports, which I think will be decided on quality," he said.

Biodiesel industry's consumption of soyoil gets a boost in July

Last week, the Census Bureau reported a surprisingly large surge in biodiesel's consumption of soybean oil to 346 million pounds in July from 257 million in June and 164 million a year ago.

The July disappearance of soyoil was 82 million pounds more than industry observers expected, prompting a 300-million-pound increase in 2006/07 soyoil used in biodiesel production to 2.9 billion pounds. It appears that nearly all of the new biodiesel production facilities that were completed in recent months have been running at nearly full capacity. Nearly 250 million gallons of annual biodiesel production capacity has come on line from Apr 1 to Jul 1, and the amount of unused capacity has increased very slightly.

September/November US agricultural exports expected to be good

Exports of grains and oilseeds for the first quarter of 2007/08 are well situated to have the highest shipments since 1995. For September to November, total grain and soybean exports are forecast at 35 million tonnes, 7 percent more than last year's exports for the quarter. This will be a strong export campaign, testing the infrastructure and transport modes to move to market position. By port range, the Gulf is expected to handle 54 percent of this volume, the Pacific North-west 20 percent, and the Texas Gulf 13 percent.

Capacity at the Gulf will be pressured, but not as much as in previous years when there was a greater commodity mix. Exports through the Gulf are forecast at 18.9 million tonnes, a volume that was nearly put through the Gulf for this quarter in 2003. But the commodity mix during 2004 was quite different from this year. During 2003, the mix through the Gulf was 50 percent corn, 35 percent soybeans and 11 percent wheat. For 2007, the mix is expected to be 62 percent corn, 25 percent soybeans and 10 percent wheat.
2007 net farm income forecast to hit record-high US$87.1 billion

Receipts from the sale of crops and livestock are rising more rapidly than farmers' production expenses, increasing USDA's forecast for net farm income this year.

In its latest update, USDA forecast net farm income in 2007 at US$87.1 billion, up US$28.1 billion from 2006, and nearly US$30 billion above its 10-year average of US$57.4 billion. The previous record of US$85.9 billion was set in 2004.

Cash receipts from this year's farm production are forecast to rise to US$276.4 billion, up from US$239.3 billion in 2006, due to large increases in the value of both crops and livestock. Sales of crops are forecast to hit US$136.2 billion (up from US$120.0 billion in 2006), while sales of livestock are seen rising to US$140.2 billion, from US$119.3 billion last year.

USDA forecasts that for most field crops, 2007 cash receipts will likely be a record high. Receipts from corn and soybeans ¡¡ìC¡¡ìC the top two crops in receipts ¡¡ìC¡¡ìC are both expected to be up, with corn receipts exceeding US$31 billion and soybeans exceeding US$19 billion.

The report says that so far this year, market prices for corn, wheat and soybeans have remained above 2006 levels "and should do so throughout the year." In its latest supply and demand report, USDA forecast a range of per-bushel season average prices for wheat at US$5.10 to US$5.50 (versus US$4.36 in 2006); corn at US$2.80 to US$3.40 (versus US$3.00 in 2006); and soybeans at US$7.25 to US$8.25 (versus US$6.40 in 2006).

On the other side of the ledger, USDA forecasts total farm production expenses will rise US$17.4 billion (7.5 percent) to a record-high US$249.9 billion in 2007, the fifth straight annual increase of more than 4 percent.

If realised, the 2007 increase would be the second greatest on record, exceeded only by the US$20 billion jump in 1979. Fertiliser and miscellaneous expenses each are forecast to rise more than US$2.0 billion (16 percent and 8 percent respectively).

Total labour cost is expected to be up US$1.7 billion (7 percent), while seed expenses are forecast up US$1.6 billion (14 percent). The principal crop-related expenses - seed, fertilisers, and pesticides - are forecast at US$37.3 billion, up US$4.1 billion (12 percent) from 2006 and the fifth straight increase of US$1.0 billion or more. All three expenses are expected to rise to their highest levels ever, says USDA.

  

US & 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	6,960	12,229	15,660	514	672	2,816	1,638	2,252	2,578
Production	83,368	86,770	71,448	40,500	47,200	47,000	57,000	59,000	61,000
Imports	92	109	109	1,013	1,800	1,800	40	100	50
Crush	47,324	48,852	48,988	32,740	35,600	38,750	28,756	29,300	29,300
Exports	25,579	29,937	27,760	7,130	9,700	10,300	24,770	26,500	29,200
Other	5,288	4,659	4,477	1,485	1,556	1,600	2,900	2,974	3,000
Usage	78,191	83,448	81,225	41,355	46,856	50,650	56,426	58,774	61,500
Carryout	12,229	15,660	5,992	672	2,816	966	2,252	2,578	2,128
Soymeal	thousand tonnes
Carryin	156	285	272	671	1,132	1,132	640	694	744
Production	37,416	38,575	38,859	25,737	28,035	30,519	22,300	23,175	22,735
Domestic use	30,114	30,981	31,525	584	600	640	10,173	10,745	11,100
Net Exports	7,173	7,607	7,334	24,692	27,435	29,564	12,073	12,380	11,770
Usage	37,287	38,588	38,859	25,276	28,035	30,204	22,246	23,125	22,870
Carryout	285	272	272	1,132	1,132	1,447	694	744	609
Soybean oil	thousand tonnes
Carryin	771	1,365	1,388	95	92	121	248	250	331
Production	9,248	9,217	9,267	6,085	6,622	7,220	5,521	5,740	5,625
Domestic use	8,147	8,460	9,027	424	656	775	3,222	3,421	3,510
Net exports	507	734	619	5,664	5,937	6,470	2,297	2,238	2,187
Usage	8,654	9,194	9,646	6,088	6,593	7,245	5,519	5,659	5,697
Carryout	1,365	1,388	1,009	92	121	96	250	331	259

 

USDA Export Sales (tmt) - Week of 30 August 2007 

Country	Commodity	New	Accum.		Country	Commodity	New	Accum.
		Sales	Exports				Sales	Exports
Canada	Soybeans	2.4	131.9		Malaysia	Soymeal	0.5	23.5
China	Soybeans	73.2	1143.5		Mexico	Soymeal	8.7	1301.7
Colombia	Soybeans	12.7	328.3		Salvador	Soymeal	4.7	115.1
Egypt	Soybeans	9.5	763.2		Surinam	Soymeal	1.3	6.3
Indonesia	Soybeans	4.8	1450.9		Thailand	Soymeal	2	0
Japan	Soybeans	21.1	3158.5		Trinidad	Soymeal	1.4	20.6
Mexico	Soybeans	12.5	3843.9		Canada	Soyoil	0.6	33.1
Taiwan	Soybeans	9.4	1932.1		Export Sales Totals (tmt)
Canada	Soymeal	15.8	1231.8		Commodity	Outstanding	Accum.	New
Colombia	Soymeal	8.8	283.7			Sales	Exports	Sales
Dom. Rep.	Soymeal	2.6	390.3		Soybeans	990.1	30,261.00	134.6
Jamaica	Soymeal	3.7	95.4		Soymeal	781.3	6,147.10	33.1
Japan	Soymeal	0.5	230.5		Soyoil	112.1	555.3	41.9