March 24, 2008

 

ASA weekly: US soy lower on global liquidation of commodities funds

 

 

The US soy complex closed lower on March 20, the result of worldwide liquidation of commodities by funds.

 

Some unconfirmed reports say that a Chinese buyer had defaulted on one cargo of soy and that there may have also been defaults on 1-2 cargoes of soyoil according to floor traders.

 

Meanwhile, the Argentine agriculture secretary increased the estimate of this year's soy crop by 500,000 tonnes to 47 million tonnes, in line with the current USDA estimate.

 

May soy futures closed down US$18.37, finishing at US$443.49; July lost US$18.37, closing at US$449.00; and August was down US$18.37, ending at US$446.80.

 

May soymeal decreased US$0.44 closing at US$342.04; July was US$1.32 lower, finishing at US$346.67; and August meal closed down US$4.08, ending at US$343.37.

 

May soy oil decreased US$44.09 to finish at US$1199.30; July was down US$44.09, closing at US$1215.62; and August was US$44.09 lower, closing at US$1220.91.

US exports large share of biodiesel production

 

US soy oil prices have risen well above their breakeven level for biodiesel production, with the exception of some niche markets where biodiesel is priced at a premium to conventional diesel that is well in excess of the US$1 excise tax credit.

 

As a result, domestic usage of biodiesel has been rather modest in recent months. Nearly half of all US biodiesel production from November through January was exported, with basically all of the shipments going to the EU.

Biodiesel prices in the EU are significantly higher than those in the US, especially with the weak US dollar.

Furthermore, Europe is unable to meet its biofuel usage targets with domestic biodiesel production, partially due to substantial rise in vegetable oil prices over the past 6 months that has significantly reduced biodiesel profitability around the world.

South Korea removes import duties on 70 products

 

As consumer prices in South Korea rose by 3.9 percent in January and 3.6 percent in February on-year, the government announced last week that it will remove import duties on some 70 products as of April 1 in a bid to quell inflation in the country.

 

The Korean currency dropped to a 26-month low early last week. The removal of tariffs will come on products that include soymeal, wheat, corn, syrup, and coffee cream. The country also is mulling a reduction of import duties on other products.

 

Presidential spokesperson Lee Dong-kwan said that as part of the anti-inflationary steps, the government will lower or eliminate import quota tariffs for a total of 82 items in the categories of grains, raw materials and agricultural and petrochemical goods.

 

Notably, the government will eliminate import tariffs on 90 percent, or 70, of the concerned products, effective April 1, Lee said.

 

Falling US dollar helps to offset rising costs to Asian buyers

 

The high cost in ocean freight for Asian importers is offset with the lower exchange rate as the US dollar weakened against the Japanese Yen.

 

The US dollar has been down 19 percent since last summer's peak of JPY124 the US dollar. The Yen closed the week to a 12-year low to 100.58 Yen.

 

Since the start of the year the Gulf to Japan rate is up 3 percent in USD per tonne, but down 6 percent in Yen per tonne.

 

From the Pacific Northwest the rate is up 13.5 percent in U.S. dollars per tonne and 3.7 percent for the Yen.

The spread between the two routes gives the Gulf an even better advantage with it down 8 percent for the US dollar and 16 percent for the Yen. The change in currency gives the Asian buyer some relief from price inflation.

 

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 13 March 2008
Country	Commodity	New Sales	Accum. Exports		Country	Commodity	New Sales	Accum. Exports
Canada	Soybeans	1.00	108.80		Japan	Soymeal	18.80	149.50
China	Soybeans	78.90	9919,6		Mexico	Soymeal	14.70	558.20
Colombia	Soybeans	4.00	147.80		New Guinea	Soymeal	4.00	2.50
Costa Rica	Soybeans	36.30	148.80		Nicaragua	Soymeal	1.80	21.80
Cuba	Soybeans	41.50	49.50		Philippines	Soymeal	6.80	308.80
Egypt	Soybeans	60.00	524.50		Romania	Soymeal	1.50	25.20
Germany	Soybeans	63.30	918.40		Russia	Soymeal	7.00	0.00
Indonesia	Soybeans	7.40	582.00		Salvador	Soymeal	10.20	27.90
Japan	Soybeans	48.20	1600.00		Saudi Arabia	Soymeal	7.20	184.10
Mexico	Soybeans	103.80	1978.90		Venezuela	Soymeal	1.00	164.10
Netherlands	Soybeans	63.40	1051.60		Algeria	Soyoil	19.50	90.00
Philippines	Soybeans	1.80	28.30		Canada	Soyoil	1.40	15.80
Portugal	Soybeans	54.50	396.30		Colombia	Soyoil	9.50	25.70
Taiwan	Soybeans	38.20	109.40		Guatemala	Soyoil	10.00	12.70
Vietnam	Soybeans	5.80	36.90		Korea, Rep.	Soyoil	15.00	30.80
Canada	Soymeal	13.90	605.30		Mexico	Soyoil	11.50	72.20
Cyprus	Soymeal	0.60	0.00		Panama	Soyoil	2.60	4.80
Dom. Rep.	Soymeal	13.50	202.30
Honduras	Soymeal	25.90	74.40		Export Sales Totals (tmt)
Indonesia	Soymeal	9.40	67.10		Commodity	Outstanding Sales	Accum. Exports	New Sales
Ireland	Soymeal	2.40	30.00		Soybeans	5,191.10	21,351.20	438.50
Italy	Soymeal	77.00	0.00		Soymeal	1,543.80	3,650.90	175.80
Jamaica	Soymeal	16.10	47.50		Soyoil	175.00	605.40	23.90