July 2, 2007

 

ASA weekly: USDA grain stocks and planted area report recap; China soyoil imports up 50 percent over 2006 level; Grain barge movements sputtering; WRDA in conference; House farm bill debate to focus on differing views of funding
 

 

USDA grain stocks and planted area report recap
 

USDA released its June Planted Acreage report last week, along with its estimates of US grain stocks on hand at Jun 1, 2007. The 2007 soybean planted area is estimated at 25.9 million hectares, down 15 percent from last year's record high, according to USDA. 

 

Area for harvest, at 25.6 million hectares, is also down 15 percent from 2006.  This is the lowest planted and harvested area for soybeans since 1995.  With the exception of New York, Pennsylvania, and the south-eastern States, planted acreage decreased in all States across the country.

 

Growers in Illinois and Iowa showed the largest decrease in soybean acreage from last year, down 708,000 hectares and 546,000 hectares, respectively.  Large declines in soybean area occurred across the Corn Belt and Great Plains, with planted acreage also down more than 1 million acres from last year in Indiana, Minnesota, and Nebraska. 

 

USDA found that many farmers across the United States shifted to planting more corn this year at the expense of soybeans.  However, increases in soybean area occurred across the south-east, where some farmers shifted from cotton to corn and soybeans, USDA said. 

 

New York set a new record high planted area at 87,000 hectares.  Nationally, farmers reported to USDA that 88 percent of the intended soybean acreage had been planted at the time of the survey interview, compared with the average of 81 percent for the past five years.

 

According to USDA, soybeans stored in all positions on Jun 1, 2007, totalled 29.8 million tonnes, up 10 percent from Jun 1, 2006, and the largest Jun 1 stocks on record.  On-farm stocks totalled 13.6 million tonnes, up 1 percent from a year ago.  Off-farm stocks, at 16.1 million tonnes, are up 19 percent from the previous year.  Indicated disappearance for the March - May 2007 quarter totalled 18.9 million tonnes, up 3 percent from the same period a year earlier, USDA said.

 

China soyoil imports up 50 percent over 2006 level
 

China is continuing to import greater volumes of soyoil with 1.05 million tonnes entering the country in the first five months of the year, up 50 percent from the same period last year, according to data from the country's customs office.

 

In May alone, the country imported 260,000 tonnes of the commodity, almost 16 times the 16,580 tonnes imported in May 2006. Production of the oil, which accounts for about 47 percent of total domestic edible oil output, has slowed this year due to a poor harvest and imports are required to meet the deficit.

 

In the past, the Chinese government has expressed concerns over rising domestic soyoil costs, but analysts agree that prices will most likely remain high for the time being. They claim the administration is more concerned about too fast a rise in prices, rather than the overall price in itself. This suggests that the Chinese government is unlikely to introduce measures to stabilise prices of cooking oil for local consumption as has been seen recently in Indonesia.

 

Grain barge movements sputtering; WRDA in conference
 

The movement of oilseeds, grain, steel, fertilisers and other commodities has been less then lustrous during the first half of 2007, and is poised to finish the 2006/07 crop year with a whimper. Grain barge movements started the year off fast in conjunction with a promising export year.

 

But the export sales pace slowed and instead of being ahead of last year's pace, has now dipped below that pace.

 

For the first six months of 2007, grain movements are projected to total less than 16 million tonnes through the key locks off the Upper Mississippi, Ohio and Arkansas Rivers, down a little more than 1 million tonnes from last year while slightly better than two years ago. Since Sep 1 last year, movements are nearing 30 million tonnes, 6 percent better than last year.

 

In related transport news, the Waterways Resource Development Act (WRDA) is again back in conference. This time, it is being led by a democratic controlled effort. The WRDA includes authorisation for new 1,200 foot locks and ecosystem restoration. The earliest the bill could leave conference will be after the July 4 recess. Once out of conference, both legislative chambers will need to vote on it and if passed, send it to the White House for the president's signature.

 

Once singed as law, another battle will ensue to have money appropriated to start the construction projects. The projects are important since the Army Corps of Engineers maintain and construct locks on the navigable river system. Most recently, an emergency repair at the Mel Price lock and dam on the Upper Mississippi River was completed.

 

The fragility of the lock system is a considerable risk to shippers and barge operators alike. Without a reliable and dependable system, shippers consider other alternatives to move commodities and products, while opting for other locations to fulfill their business requirements.

 

House farm bill debate to focus on differing views of funding
 

It will be a dual-personality farm bill when House Ag Committee members markup the new farm bill likely the second week after members return from their July 4 recess. House Ag Chairman Collin Peterson last week met with commodity and farm group lobbyists and other stakeholders in an attempt to reach a farm bill consensus on several contentious issues. However, differences remained, largely due to farm bill funding unknowns. Hence, the reported strategy of bringing two farm bill versions to the Ag Committee for consideration - one with some additional funding for some programmes offset by cuts elsewhere (changes in advance direct payments, and a ban on subsidies for farms with base acres of 20 acres or less).

 

The other farm bill markup vehicle would include US$17.5 billion to US$18 billion in additional money from reserve funds above the Congressional Budget Office (CBO) budget baseline. It will be interesting to see whether Peterson details show where the offsets will come from - sources say such offsets are unlikely to be revealed. Under Pay/Go rules, use of reserve funds must be offset by budget cuts elsewhere and/or revenue enhancers.

 

The full Agriculture Committee is expected to debate the bills the second week after they return from the July 4 recess. It is unclear whether both bills will be sent to the Rules Committee and House floor.

 

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 tonnenes
Carryin	3,059	6,960	12,229	2,434	514	579	3,598	1,638	2,252
Production	85,013	83,368	86,770	39,000	40,500	45,500	53,000	57,000	58,800
Imports	152	92	109	708	900	725	352	40	100
Crush	46,160	47,320	48,036	29,560	32,600	37,150	29,728	28,756	29,400
Exports	30,011	25,778	29,393	10,548	7,200	7,550	22,799	24,770	26,700
Other	5,093	5,093	4,951	1,520	1,535	1,516	2,785	2,900	2,974
Usage	81,264	78,191	82,380	41,628	41,335	46,216	55,312	56,426	59,074
Carryout	6,960	12,229	16,728	514	579	588	1,638	2,252	2,078
Soymeal	thousand tonnenes
Carryin	191	156	285	564	671	564	841	640	894
Production	36,936	37,414	37,939	23,347	25,687	29,250	22,928	22,327	22,800
Domestic use	30,446	30,097	30,527	538	544	550	9,121	10,000	10,644
Net Exports	6,525	7,188	7,425	22,702	25,250	28,700	14,008	12,073	12,215
Usage	36,971	37,285	37,952	23,240	25,794	29,250	23,129	22,073	22,859
Carryout	156	285	272	671	564	564	640	894	835
Soybean oil	thousand tonnenes
Carryin	488	771	1,370	91	35	32	293	248	250
Production	8,781	9,250	9,069	5,404	6,000	6,850	5,708	5,521	5,625
Domestic use	7,910	8,144	8,505	378	428	683	3,059	3,222	3,335
Net exports	588	507	667	5,082	5,575	6,166	2,694	2,297	2,292
Usage	8,498	8,651	9,172	5,460	6,003	6,849	5,753	5,519	5,627
Carryout	771	1,370	1,267	35	32	33	248	250	248

 

USDA Export Sales (tmt) - Week of 21 June 2007

		New	Accum.				New	Accum.
Country	Commodity	Sales	Exports		Country	Commodity	Sales	Exports
China	Soybeans	64.4	10950.7		Nicaragua	Soymeal	2.9	44.3
Colombia	Soybeans	4.5	248		Peru	Soymeal	1.2	21.9
Indonesia	Soybeans	15	1239.9		Philippines	Soymeal	13.1	314.3
Japan	Soybeans	75.2	2532.8		Dom. Rep.	Soyoil	2.1	8.1
Mexico	Soybeans	69.2	3196.8		Jamaica	Soyoil	0.5	15.5
Netherlands	Soybeans	10	1418.6		Korea, Rep.	Soyoil	22.9	34
Singapore	Soybeans	0.5	0.3		Mexico	Soyoil	2.6	65.4
Taiwan	Soybeans	56.2	1585.1		Salvador	Soyoil	0.6	9.7
Canada	Soymeal	10.8	936.5		Export Sales Totals (tmt)
Colombia	Soymeal	3.8	229			Outstanding	Accum.	New
Dom. Rep.	Soymeal	6.9	327.1		Commodity	Sales	Exports	Sales
Honduras	Soymeal	7.9	103.4		Soybeans	2,282.10	27,530.60	239.7
Japan	Soymeal	6.5	256.9		Soymeal	1,375.00	4,966.50	55.7
Mexico	Soymeal	7	1006.4		Soyoil	77.3	405	29