February 25, 2008

 

ASA weekly: US soy to deplete by the end 2008 on strong global demand
 

Strong demand for soy is estimated to deplete US supplies by the end of the 2007-08 marketing year.

 

Production for 2008-09 will likely have to be better than currently expected to satisfy expanding world demand.

Recent reports contradict early indications at the end of 2007 that demand outside of EU and China was slipping.

 

Analysts project that overall world demand for soy and soymeal will accelerate during the January to March quarter with Chinese import propelled by small soy crop.

 

While exports of soy and soymeal to China and the EU were strong during the last half of 2007, shipments elsewhere slipped below year-ago levels during October to December period.

 

However, EU-27 import demand was at high levels due to a feed grain shortage and import demand elsewhere, especially in Mexico, rebounding smartly in January from a drop off in November and December.

 

The resilience of world demand puts increased pressure on the market to either attract a sizable boost in US and South American soybean plantings or to rally further to find a price level that can crimp demand.

 

USDA chief economist estimates 2-3 years of high commodity prices

 

Chief economist at the USDA, Joe Glauber, said last week that agricultural commodities prices will remain high for the next few years, on strong demand from the biofuels industry and from the emerging markets such as China and India.

 

The price of soy, wheat and rice has surged this year to all-time highs and corn prices have jumped to a 12-year record, Glauber said during USDA's 2008 Agricultural Outlook Forum.

 

Glauber explained that the unprecedented expansion of the biofuels industry would keep the agricultural market tight, as higher acreage devoted to biofuel crops would reduce the amount of arable land for crops such as wheat.

 

Glauber added that prices could come down in the long-term if farmers increased their overall production by using more arable land or boosting yields. He forecast that consumer food prices in the US would rise at an annual rate of 3 to 4 percent.

 

Argentina forecasts 2007-08 soy production at 45 to 48 million tonnes

 

Argentina's secretary of agriculture issued its first soy forecasts of the season last week between 45 and 48 million tonnes, averaging 46.3 million tonnes.

 

Last season, Argentina initial forecast about 42.5 and 44.5 million tonnes with the final production totaling much larger at 47.5 million.

 

US soy complex mostly higher as futures rally to new contract highs

 

The US soy complex closed mostly higher on February 21 as soy futures rallied to new contract highs in all but the March contract.

 

Soy oil also continued to go up as it made new highs along with Malaysian palm oil amid talk of Chinese buying.

 

The USDA expected 28.7 million hectares of soy to be planted this year. The estimate was viewed as being supportive as new-crop soy posted double-digit gains.

 

For the rest of the 2008-09 balance sheet, USDA essentially used the same acreage abandonment, yield and usage forecasts that were in its 10-year baseline forecasts released earlier this month.

 

USDA's 2008-09 carryout was at 4.6 million tonnes, up 245,000 tonnes from where USDA previously had pegged the 2007-08 carryout.

 

Market concerns about the sufficiency of soysupplies could be assuaged for the time being and allow prices to temporary stabilize or perhaps set back. Any near-term complacency increases the risk that the soy complex will face an intolerably tight situation in the next year or two.

 

March soy futures closed up US$2.94, finishing at US$516.53; May gained US$2.85, closing at US$523.50; and July was up US$3.22, ending at US$528.92.

 

March soymeal decreased US$1.21 closing at US$396.06; May was US$0.44 lower, finishing at US$403.66; and July meal closed up US$0.33 ending at $408.51.

 

March soy oil increased US$13.89 to finish at US$1351.64; May was up US$14.33, closing at US$1369.50; and July was US$15.43 higher, closing at $1382.50.

 

U.S. & South America Soybean/Products Balance
¡¡	United States			Argentina			Brazil
	Actual	Estimate	Proj.	Actual	Estimate	Proj.	Actual	Estimate	Proj.
	2005/06	2006/07	2007/08	2005/06	2006/07	2007/08	2005/06	2006/07	2007/08
Soybeans	thousand tonnes
Carryin	6,960	12,229	15,589	174	334	2,264	1,638	2,252	2,578
Production	83,368	86,770	70,605	40,500	47,200	47,000	57,000	59,000	62,000
Imports	92	246	163	1,013	2,100	2,200	40	60	100
Crush	47,324	49,160	49,805	32,748	35,600	38,750	28,756	30,500	29,400
Exports	25,579	30,428	27,080	7,130	10,250	10,500	24,770	25,300	30,400
Other	5,288	4,068	4,447	1,475	1,520	1,620	2,900	2,934	2,950
Usage	78,191	83,656	81,332	41,353	47,370	50,870	56,426	58,734	62,750
Carryout	12,229	15,589	5,025	334	2,264	594	2,252	2,578	1,928
Soymeal	thousand tonnes
Carryin	156	285	318	1,686	1,996	1,696	640	794	766
Production	37,416	39,033	39,448	25,582	27,718	30,425	22,300	23,637	22,755
Domestic use	30,114	31,171	32,024	574	618	645	10,073	11,000	11,220
Net Exports	7,173	7,829	7,470	24,698	27,400	29,764	12,073	12,665	11,620
Usage	37,287	39,000	39,494	25,272	28,018	30,409	22,146	23,665	22,840
Carryout	285	318	272	1,996	1,696	1,712	794	766	681
Soybean oil	thousand tonnes
Carryin	771	1,366	1,317	385	487	520	248	300	286
Production	9,248	9,292	9,421	6,169	6,810	7,400	5,521	5,850	5,641
Domestic use	8,146	8,502	9,026	402	600	985	3,172	3,455	3,540
Net exports	507	839	731	5,665	6,177	6,435	2,297	2,409	2,167
Usage	8,653	9,341	9,757	6,067	6,777	7,420	5,469	5,864	5,707
Carryout	1,366	1,317	981	487	520	500	300	286	220

 

USDA Export Sales (tmt) - Week of 14 February 2008
Country	Commodity	New Sales	Accum. Exports		Country	Commodity	New Sales	Accum. Exports
Barbados	Soybeans	1.50	9.60		Ireland	Soymeal	1.50	7.30
Canada	Soybeans	1.50	100.50		Jamaica	Soymeal	1.00	40.20
China	Soybeans	248.50	8474.30		Japan	Soymeal	3.30	121.10
Colombia	Soybeans	5.60	133.30		Korea, Rep.	Soymeal	3.40	106.70
France	Soybeans	32.00	93.10		Malaysia	Soymeal	1.10	28.30
Indonesia	Soybeans	6.80	494.00		Mexico	Soymeal	5.30	434.90
Israel	Soybeans	8.10	208.50		Surinam	Soymeal	0.40	1.70
Japan	Soybeans	36.60	1411.70		Turkey	Soymeal	1.80	51.20
Korea, Rep.	Soybeans	2.20	335.90		Vietnam	Soymeal	3.70	30.00
Mexico	Soybeans	158.90	1634.90		Canada	Soyoil	0.80	12.80
Netherlands	Soybeans	0.90	836.00		China	Soyoil	53.20	135.20
Portugal	Soybeans	71.60	341.80		Colombia	Soyoil	1.60	17.20
Syria	Soybeans	42.20	328.40		Dom. Rep.	Soyoil	10.00	5.60
Taiwan	Soybeans	77.60	874.30		Mexico	Soyoil	1.70	64.90
Turkey	Soybeans	1.20	283.10
Vietnam	Soybeans	6.00	28.40		Export Sales Totals (tmt)
Colombia	Soymeal	14.10	159.80		Commodity	Outstanding Sales	Accum. Exports	New Sales
Dom. Rep.	Soymeal	23.80	181.00		Soybeans	6,977.20	18,082.70	630.70
Guatemala	Soymeal	21.30	101.40		Soymeal	1,767.90	2,924.80	48.60
Honduras	Soymeal	2.20	62.20		Soyoil	251.70	443.10	26.90