July 16, 2007

 

ASA weekly: July crop report highlights; US biodiesel production record large in May despite decline in margins; Brazil cuts output forecast; India expects increased soyoil imports; Solae to buy Cargill's isolated soy protein technology; Philippines approves use of 41 GM plants; Dupont closer to approval of optimum GAT

 

 

July crop report highlights
 

The USDA's July Crop Production and monthly WASDE reports were released last week. Changes in US supply/use fundamentals within the soybean complex were dominated by reduced production emanating from the previously reported acreage drop.

 

Additionally however, USDA's estimated 2007/08 usage was lowered 1.36 million tonnes with estimated exports lowered 1.63 million tonnes and estimated crush increased 272,000 tonnes. The larger crush was driven by increased domestic oil (non-biodiesel) and domestic meal usage estimates.

 

World soybean production for 2007/08 was forecast at 222.1 million tonnes, 14 million tonnes below 2006/07 and 3.3 million tonnes below last month. Reduced US production was responsible for the change from last month, according to USDA.

 

Biodiesel production record large in May despite decline in margins

 

The Census Bureau reported recently that a record 111,000 tonnes of soybean oil was used in the production of methyl esters (mostly biodiesel) during May. That represents a 13,200 tonnes increase from April usage, which was revised 5,440 tonnes higher to 97,500 tonnes.

 

This increase in biodiesel production from April to May was somewhat surprising given that it occurred amid a decline in margins to their lowest level since December. The Census Bureau also released its 2006 annual summary, in which total methyl ester usage of soybean oil was virtually unchanged for the 2005/06 marketing year, but was revised 17,200 tonnes lower to 228,000 tonnes for the October-November-December 2006 quarter.

 

At the end of June, the Census Bureau reported a May crush of 4.13 million tonnes, which was 152,000 tonnes more than last year and exceeded what the market had anticipated after the NOPA crush of 3.9 million tonnes implied a Census crush of about 4.08 million tonnes.

 

Although the crush was higher than anticipated, Census reported that soyoil stocks declined to 3.267 million pounds in May from 3.290 million pounds in April, which was somewhat surprising given that NOPA stocks increased by 22 million pounds during that time.

 

Brazil cuts output forecast

 

Brazil's census bureau (IBGE) reduced the total output estimate for the 2006/07 soybean crop by 0.4 percent to 58.2 million tonnes, citing weather problems in the north-eastern states. In its May estimate, IBGE put the crop at 58.5 million tonnes. The number is still in line with most market estimates of the 2006/07 crop now being sold. The crop was harvested in May.

 

India expects increased soyoil imports

 

India is expected to import about 200,000 tonnes of crude soyoil in June, up 54 percent from a year ago, an association of edible oils importers said last week.

 

"Soyoil imports will rise as after the recent rally in palm oil prices, it has become cheaper than palm oil," B.V. Mehta, executive director of Solvent Extractors' Association of India said.

 

Moreover, the effective import costs of soyoil are much less than palm because of repeated reductions in duties and freezing of the base import price. The base price is the rate at which import duties are calculated irrespective of the landing costs.

 

Crude palm oil imports are expected to be about 220,000 tonnes in the same month, down 8.3 percent from a year earlier, said Mehta. "About 70 percent of India's monthly edible oil requirements will have to be met from imports because of a drop in oilseeds production," Mehta said.

 

Solae to buy Cargill's isolated soy protein technology

 

Solae, a joint venture between DuPont and Bunge and the leading supplier of soy protein for food-based products, has completed the acquisition of Cargill's isolated soy protein Prolisse, including the patented membrane technology for processing it.

 

"The combination of Solae's isolated soy protein business and Cargill's Prolisse product line is a perfect fit," said Tony Arnold, chief executive and president of Solae. "We are committed to the soy ingredient industry and this investment will enable us to continue serving customers with quality and reliability."

 

Solae will consolidate Cargill's products and technology into an existing plant, hence ensuring reliability of supply. Financial terms were not disclosed.

 

Philippines approves use of 41 GM plants; Dupont closer to approval of optimum GAT

 

The Philippines has so far approved 41 varieties of genetically modified (GM) plants for use in the country, according to Clarito Barron, assistant director of the Bureau of Plant Industry (BPI).

 

Plant varieties that have been approved for direct use as food, feed and for processing are soybean, corn, rapeseed, potato, cotton, sugarbeet and alfalfa, Barron said at a news briefing.

 

In related news, Dupont has completed regulatory submissions for its Optimum GAT trait in soybeans and corn to the Food & Drug Administration and the USDA. Dupont said that it is on track to complete its submission to the Environmental Protection Agency later this year. DuPont plans to introduce soybean seeds containing the trait by 2009.

 

Optimum GAT is a glyphosate, ALS-tolerant trait that also has tolerance to herbicides designed to complement glyphosate by providing additional contact and residual control on grass and broadleaf weeds, giving growers the flexibility to tailor weed control programmes to local field conditions.

 

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 tonnes
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 tonnes
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 tonnes
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 05 July 2007

Country	Commodity	New	Accum.		Country	Commodity	New	Accum.
		Sales	Exports				Sales	Exports
Barbados	Soybeans	2.3	22.1		Honduras	Soymeal	5.6	105.6
Canada	Soybeans	1.3	118.8		Japan	Soymeal	7.6	287.7
China	Soybeans	59.7	11010.4		Mexico	Soymeal	3.6	1055.6
Colombia	Soybeans	1.3	264.4		Salvador	Soymeal	6.7	93.1
Costa Rica	Soybeans	7.9	237.5		Saudi Arabia	Soymeal	2.1	80.4
Egypt	Soybeans	9	719.4		Venezuela	Soymeal	11.6	11.6
Mexico	Soybeans	69.2	3290.8		Algeria	Soyoil	11.5	31.3
Netherlands	Soybeans	9.3	1435.4		Guatemala	Soyoil	2.2	19.3
Philippines	Soybeans	9.9	63.2		Mexico	Soyoil	3.4	67.8
Taiwan	Soybeans	17.1	1635.6		Nicaragua	Soyoil	2.8	9.8
Belize	Soymeal	9	3		Salvador	Soyoil	0.5	9.7
Bulgaria	Soymeal	10	6.6		Export Sales Totals (tmt)
Canada	Soymeal	4.6	1019.5		Commodity	Outstanding	Accum.	New
Colombia	Soymeal	10.6	237.1			Sales	Exports	Sales
FW Ind	Soymeal	1	10.6		Soybeans	2,147.40	28,002.10	145
Guatemala	Soymeal	1.3	250.9		Soymeal	1,295.10	5,187.20	41
Guyana	Soymeal	1.1	10.8		Soyoil	87.3	417.9	9.3