March 6, 2006

 

ASA Weekly: South Korea rejects some Brazilian soymeal; increased concentration in global soybean production seen

 

 

South Korea rejects some Brazilian soymeal

 

South Korean feed producers have been rejecting low-protein-solubility Brazilian soymeal for failing to reach the required minimum protein levels.

 

Last week, South Korean feed traders reported that local feed makers had rejected one cargo of Brazilian soymeal with low protein solubility and were claiming compensation on another. The protein solubility of soymeal from the two cargoes was below the required 70 percent, making it difficult for animals to digest, traders said.

 

Earlier in February, the Korea Feed Association rejected 55,000 tonnes of Brazilian soymeal from Cargill. The protein solubility of the material, which arrived on Feb 17, was only between 50 and 60 percent, according to South Korean traders.

  

Increased concentration in global soybean production seen

 

Despite continued high energy prices, the Food and Agricultural Policy Research Institute (FAPRI) expects world economic growth to remain strong in the coming decade, at about 3 percent per annum, boosting consumption of vegetable oil, dairy products, and meat in many parts of the world. According to FAPRI, solid commodity prices and a persistently weak US dollar in industrialised trading countries keep US exports strong for the next 10 years.

 

FAPRI continues to foresee greater concentration in soybean production. Argentina, Brazil and the US increase their combined production share from 82 percent to 84 percent of world production. World soybean production could be 277 million tonnes by 2015/16, a 24-percent increase from 2005/06, FAPRI says.

 

The Institute also believes that Brazil will overtake the US as the largest soybean producer and exporter in the world, holding a 34-percent share of world production and a 51-percent share of world trade by 2016. The US share of soybean production and trade could drop to 30 and 27 percent, respectively, if FAPRI's forecast holds true.

 

However, China, the world's largest importer of soybeans, likely will expand its imports from 41 to 52 percent of total world imports by 2015/16, which could be a continued boost to the US soybean sector.

 

FAPRI also reports that new policy developments and rising interest in renewable fuels due to high fossil energy costs are expected to boost ethanol and bio-diesel markets in the US, European Union and Asia. Industry thus expands its use of oilseeds, grains, and sugarcane, and prices are sustained.

 

Established in 1984 by a grant from the Congress, FAPRI is a dual-university research programme with research centres at the Centre for Agricultural and Rural Development at Iowa State University and the Centre for National Food and Agricultural Policy at the University of Missouri-Columbia. FAPRI uses comprehensive data and computer modelling systems to analyse the economic interrelationships of the food and agriculture industry.

  

Johanns and Portman told to secure market access gains at WTO negotiations

 

Sixteen major agricultural commodity groups last week wrote US Trade Representative Rob Portman and USDA Secretary Mike Johanns urging them to lock in meaningful market access gains for each major US commodity before market access details are finalised via WTO negotiations slated to be complete by Apr 30.

 

The American Soybean Association, American Sugar Alliance, National Cattleman's Beef Association, National Corn Growers Association, National Pork Producers Council and other commodity groups, signed the letter.

 

"Our producers will find it difficult to support a final WTO agreement that requires substantial reductions in trade-distorting domestic support for US farmers while allowing our largest and fastest growing competitors in the world to continue or further stimulate their competitive export sectors," the groups wrote.

 

Importantly, the groups said US negotiators should insist that developing countries that have 5 percent or more of the world market share of any commodity or semi-processed product reduce their tariffs and subsidies just like developed countries. Those countries include Brazil and Argentina for soybeans, soybean meal and soybean oil exports; Malaysia and Indonesia for palm oil; Brazil and China for poultry and pork; Argentina, India and Uruguay for beef; Argentina and China for corn; Argentina for wheat; Thailand, India and Pakistan for rice; Brazil and Thailand for sugar; and Brazil for cotton.

 

The groups also focused on exempting certain sensitive products from formula cuts. The letter said that if language does not specify restrictions on how, and to what extent, sensitive products can be designated, "it will be impossible to reach consensus on this issue in the bilateral phase of negotiations".

 

The groups expressed their concern that developing countries will use the special products and the safeguard mechanism against import surges to avoid tariff reductions.

 

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	6,954	1,630	2,046	2,181	3,231	2,453	715
Production	66,778	85,013	82,820	33,000	39,000	40,500	50,500	51,000	58,500
Imports	151	152	109	540	530	485	364	400	425
Crush	41,631	46,160	46,811	25,072	27,800	29,100	29,172	28,175	29,675
Exports	23,946	30,011	27,759	6,500	9,800	10,000	19,571	22,180	25,750
Other	3,146	5,099	4,297	1,552	1,795	1,810	2,899	2,783	3,000
Usage	68,723	81,270	78,867	33,124	39,395	40,910	51,642	53,138	58,425
Carryout	3,059	6,954	11,016	2,046	2,181	2,256	2,453	715	1,215
Soymeal	thousand tonnes
Carryin	200	191	155	347	354	560	763	532	200
Production	32,953	36,938	37,116	19,807	21,806	22,900	22,920	22,200	23,395
Domestic use	28,590	30,448	31,116	700	850	950	8,784	8,850	9,250
Net Exports	4,372	6,526	5,928	19,100	20,750	22,050	14,367	13,682	14,050
Usage	32,962	36,974	37,044	19,800	21,600	23,000	23,151	22,532	23,300
Carryout	191	155	227	354	560	460	532	200	295
Soybean oil	thousand tonnes
Carryin	676	488	771	99	74	100	150	93	95
Production	7,748	8,781	9,011	4,513	5,115	5,354	5,258	5,120	5,371
Domestic use	7,651	7,910	8,142	140	145	155	2,710	2,848	2,870
Net exports	285	588	583	4,398	4,944	5,224	2,605	2,270	2,516
Usage	7,936	8,498	8,725	4,538	5,089	5,379	5,315	5,118	5,386
Carryout	488	771	1,057	74	100	75	93	95	80

 

USDA Export Sales (tmt) - Week of 23 February 2006
Country	Commodity	New Sales	Accum. Exports		Country	Commodity	New Sales	Accum. Exports
Barbados	Soybeans	2	7.7		Japan	Soymeal	13.10	169.00
Canada	Soybeans	6.20	150.10		Mexico	Soymeal	12.20	591.80
China	Soybeans	250.70	1473.70		Morocco	Soymeal	1.00	20.40
Colombia	Soybeans	3.50	91.00		Philippines	Soymeal	0.90	245.00
Indonesia	Soybeans	7.50	630.60		Salvador	Soymeal	2.80	56.70
Japan	Soybeans	38.90	1456.40		Saudi Arabia	Soymeal	22.00	61.00
Mexico	Soybeans	25.40	1731.50		Canada	Soyoil	0.10	12.10
Morocco	Soybeans	1.20	167.30		Hong Kong	Soyoil	0.10	0.80
Netherlands	Soybeans	3.70	771.70		Indonesia	Soyoil	0.10	0.20
Philippines	Soybeans	10.60	55.30		Kuwait	Soyoil	0.10	1.10
Taiwan	Soybeans	43.50	1020.50		Trinidad	Soyoil	0.10	0.70
Canada	Soymeal	21.30	454.70
Cuba	Soymeal	1.10	70.10		Export Sales Totals (tmt)
Dom. Rep.	Soymeal	9.50	136.50		Commodity	Outstanding Sales	Accum. Exports	New Sales
Guatemala	Soymeal	3.50	113.20		Soybeans	3,406.20	16,195.80	367.70
Honduras	Soymeal	4.90	60.50		Soymeal	1,255.30	2,651.40	91.80
Hong Kong	Soymeal	0.50	9.60		Soyoil	87.40	114.60	0.40