October 17, 2005
ASA Weekly: USDA expects strong soy yields; barge freight rates likely to remain volatile
USDA expects strong soy yields
USDA said favourable soybean yields would lead to a stronger crush and lower prices during 2005-06. USDA now expects an 81-million-tonne soybean crop this year. USDA also believes that less acreage will be harvested, but high yields could more than offset that. USDA said the average expected yield is now 2.79 tonnes a hectare.
"Below-normal temperatures and adequate moisture during August and early September across most of the corn belt, Great Plains and Delta were beneficial to the crop during the final stages of development," USDA said. "Above-normal temperatures followed for the rest of September, just in time for the harvest season to begin."
Meanwhile, USDA raised its forecast for 2005-06 soymeal production to 36.6 million tonnes. Also the forecast for soy oil production was raised 8.69 million tonnes. US oilseed ending stocks for 2005-06 is projected at 8.7 million tonnes, up 0.4 million tonnes from revised 2004-05 ending stocks.
Total US oilseed production is projected at 92.8 million tonnes. Estimated season ending US soybean stocks were put at 7.08 million tonnes, essentially unchanged from beginning stocks, according to USDA.
Other oilseed production is expected higher this month by USDA, with increases for sunflower seed, canola, and cottonseed more than offsetting reduced peanut production.
Global oilseed production for 2005-06 is projected at 384.9 million tonnes, up 5.7 million tonnes from 2004-05, USDA said. Estimated soybean production for Argentina's coming season could reach 40.5 million tonnes, while Brazil's estimated production may be 60 million tonnes.
Soybean production for India may be lower than previously expected due to reduced yield prospects related to dry weather.
Barge freight rates likely to remain volatile
The glut of barges in the Centre Gulf combined with a vacuum on the upper portions of the Mississippi and Ohio river systems, along with a harvest that is well underway, is unduly pressuring an already tight fleet of barges. Also pressuring rates are the high cost of fuel, low water conditions, and strong northbound demand.
Prior to Hurricane Katrina's arrival, barge rates were already strong, but the impacts linger on and will only find relief once harvest is over and the Upper Mississippi River closes to navigation beginning Dec 15.
Until then volatility will continue as there is a lack of empty barges moving upriver through the key locks, although many barges are moving upriver as fully laden. However, these fully laden ships will not immediately show up for a grain load like an empty barge would.
Chambliss seeks to retain Congressional farm bill prerogatives
The Bush administration's latest offers to WTO members-advertised as an effort to jump-start and revitalize Doha Round agriculture talks¡ªapparently struck a negative chord Senate Agriculture Committee Chairman Saxby Chambliss.
Administration offers to restructure US domestic farm programs in return for greater market access and reductions in export subsidies by other trading partners appears to Chambliss to be on the verge of poaching the legislative branch's responsibility to write legislation.
In a letter to Agriculture Secretary Mike Johanns, Chambliss points out that "the Congress will be writing the next farm bill in 2007, and I am deeply concerned that the administration is using the current [WTO] negotiations to reshape farm policy without the full input of Congress and grass roots support".
Speaking for the administration, Johanns assured Chambliss that the Bush trade policy team will not write the next bill. The shape of specific programs will continue to be determined by Congress, said Johanns, adding that the United States will continue to support its farm sector "notwithstanding what happens at the WTO... ."
While Johanns's handling of Chambliss's current concerns may mute criticism of US negotiating positions temporarily, it likely will not end tensions with Congress regarding the approach to farm bill issues.
The administration appears determined to push for greener, leaner and more inclusive programs next year, all of which are proposals likely to affect a number of current program beneficiaries with powerful supporters in Congress. The debate over the size and focus of the next bill is just beginning, and over the next year can be expected to be far ranging and contentious.
High energy prices appear to be supporting soybean oil
Following the sharp rally in energy prices following Hurricanes Katrina and Rita, heating oil and natural gas futures have risen to levels that are comparable to soybean oil on a Btu basis. Heating oil and soybean oil futures converged on a Btu basis by the end of August and natural gas joined them by mid September.
However, analysts contended that bio-diesel production cannot expand enough to materially tighten the 2005-06 US soybean oil situation because of limited bio-diesel production capacity, increased palm oil imports and increased availability of other oils.
However, soybean oil could potentially be used directly in place of heating oil or natural gas in industrial boilers and some residential heating systems. It is not clear what the costs are of converting to soybean oil, but they are thought to be relatively modest particularly for heating oil applications.
If energy prices prop up soybean oil prices at the same time a big US crop weighs on soybean prices, soybean meal could become quite cheap and the oil share could rise to extremely high levels.
NOPA's crush exceeds estimates
The National Oilseed Processors Association (NOPA) monthly crush for September was 3.46 million tonnes, above trade estimates that ranged from 3.28-3.37 million tonnes.
Soy oil stocks were reported at 623,000 tonnes, above the average trade estimate of 601,000 tonnes.
|
US & South America Soybean/Products Balance | |||||||||
|
US |
Argentina |
Brazil | |||||||
|
Actual |
Estimate |
Proj. |
Actual |
Estimate |
Proj. |
Actual |
Estimate |
Proj. | |
|
2003/04 |
2004/05 |
2005/06 |
2004/05 |
2005/06 |
2006/07 |
2004/05 |
2005/06 |
2006/07 | |
|
Soybeans |
thousand tonnes | ||||||||
|
Carryin |
4,853 |
3,059 |
8,029 |
1,630 |
2,046 |
3,670 |
3,129 |
2,086 |
934 |
|
Production |
66,778 |
85,484 |
77,740 |
33,000 |
39,000 |
39,000 |
50,500 |
51,000 |
60,000 |
|
Imports |
151 |
136 |
108 |
540 |
530 |
485 |
350 |
470 |
200 |
|
Crush |
41,631 |
46,267 |
45,858 |
25,072 |
26,800 |
28,500 |
29,172 |
29,000 |
31,583 |
|
Exports |
23,946 |
29,801 |
30,345 |
6,500 |
9,311 |
9,800 |
19,571 |
20,300 |
23,200 |
|
Other |
3,146 |
4,582 |
4,095 |
1,552 |
1,795 |
2,010 |
3,150 |
3,322 |
3,575 |
|
Usage |
68,723 |
80,650 |
80,298 |
33,124 |
37,906 |
40,310 |
51,893 |
52,622 |
58,358 |
|
Carryout |
3,059 |
8,029 |
5,579 |
2,046 |
3,670 |
2,845 |
2,086 |
934 |
2,776 |
|
Soymeal |
thousand tonnes | ||||||||
|
Carryin |
200 |
191 |
236 |
347 |
354 |
529 |
763 |
532 |
300 |
|
Production |
32,953 |
36,863 |
36,355 |
19,807 |
21,172 |
22,515 |
22,920 |
22,852 |
24,792 |
|
Domestic use |
28,590 |
30,300 |
30,708 |
700 |
850 |
950 |
8,784 |
8,950 |
9,450 |
|
Net Exports |
4,372 |
6,518 |
5,656 |
19,100 |
20,147 |
21,704 |
14,367 |
14,134 |
15,192 |
|
Usage |
32,962 |
36,818 |
36,364 |
19,800 |
20,997 |
22,654 |
23,151 |
23,084 |
24,642 |
|
Carryout |
191 |
236 |
227 |
354 |
529 |
390 |
532 |
300 |
450 |
|
Soybean oil |
thousand tonnes | ||||||||
|
Carryin |
676 |
488 |
781 |
99 |
74 |
100 |
150 |
93 |
120 |
|
Production |
7,748 |
8,764 |
8,607 |
4,513 |
4,824 |
5,130 |
5,258 |
5,220 |
5,685 |
|
Domestic use |
7,651 |
7,847 |
8,006 |
140 |
145 |
155 |
2,710 |
2,785 |
2,920 |
|
Net exports |
285 |
624 |
651 |
4,398 |
4,653 |
5,000 |
2,605 |
2,408 |
2,735 |
|
Usage |
7,936 |
8,471 |
8,657 |
4,538 |
4,798 |
5,155 |
5,315 |
5,193 |
5,655 |
|
Carryout |
488 |
781 |
731 |
74 |
100 |
75 |
93 |
120 |
150 |
|
USDA Export Sales (tmt) - Week of 06 October 2005 | ||||||||
|
New |
Accum. |
|
New |
Accum. | ||||
|
Country |
Commodity |
Sales |
Exports |
|
Country |
Commodity |
Sales |
Exports |
|
Canada |
Soybeans |
7.2 |
10.4 |
|
New Zealand |
Soymeal |
18 |
0 |
|
China |
Soybeans |
517.8 |
401.1 |
|
Nicaragua |
Soymeal |
4 |
2.4 |
|
Colombia |
Soybeans |
0.2 |
0 |
|
OPAC Is. |
Soymeal |
2.7 |
0.5 |
|
Indonesia |
Soybeans |
9.4 |
92.4 |
|
Salvador |
Soymeal |
33.2 |
0 |
|
Japan |
Soybeans |
121.2 |
82.1 |
|
Saudi Arabia |
Soymeal |
13.2 |
8.2 |
|
Malaysia |
Soybeans |
24.5 |
24.5 |
|
Surinam |
Soymeal |
1.3 |
0 |
|
Mexico |
Soybeans |
36.4 |
261.8 |
|
Turkey |
Soymeal |
37 |
0 |
|
Philippines |
Soybeans |
1.1 |
16.2 |
|
UK |
Soymeal |
0.5 |
0 |
|
Singapore |
Soybeans |
50 |
0 |
|
Vietnam |
Soymeal |
0.5 |
0 |
|
S. Africa |
Soybeans |
3.1 |
3.1 |
|
Australia |
Soyoil |
0.2 |
0 |
|
Taiwan |
Soybeans |
48.2 |
100.5 |
|
Bahamas |
Soyoil |
0.1 |
0 |
|
Turkey |
Soybeans |
22 |
24.8 |
|
Barbados |
Soyoil |
0.3 |
0 |
|
Belize |
Soymeal |
0.4 |
0 |
|
Canada |
Soyoil |
9.6 |
1.7 |
|
Canada |
Soymeal |
408.2 |
16.4 |
|
Dom. Rep. |
Soyoil |
0.6 |
0 |
|
Dom. Rep. |
Soymeal |
27 |
0 |
|
Jamaica |
Soyoil |
0.4 |
0 |
|
Egypt |
Soymeal |
37.4 |
0 |
|
Kuwait |
Soyoil |
0.1 |
0 |
|
Guatemala |
Soymeal |
22.4 |
0 |
|
Mexico |
Soyoil |
67 |
1.7 |
|
Hong Kong |
Soymeal |
3.1 |
1.4 |
|
Export Sales Totals (tmt) | |||
|
Indonesia |
Soymeal |
7.5 |
0.8 |
|
Outstanding |
Accum. |
New | |
|
Ireland |
Soymeal |
16 |
0 |
|
Commodity |
Sales |
Exports |
Sales |
|
Jamaica |
Soymeal |
1.1 |
0 |
|
Soybeans |
6,095.50 |
1,134.40 |
684.6 |
|
Japan |
Soymeal |
36.6 |
7.1 |
|
Soymeal |
1,051.00 |
59.9 |
1,110.90 |
|
Mexico |
Soymeal |
211.9 |
18.5 |
|
Soyoil |
79.7 |
3.8 |
83.5 |
Soymeal and soy oil marketing year began Oct 1.
