July 23, 2007

 

ASA weekly: US House Agriculture Committee completes work on farm bill; Iowa biodiesel industry players form own organisation; Low soymeal stocks in South-east Asia; High palm oil prices forcing buyers to switch to other oils
 

 

House Agriculture Committee completes work on farm bill
 

The House Agriculture Committee last week completed its work on the 2007 farm bill. On Jul 18, the committee approved the commodity and conservation titles of the bill, and on Jul 19 completed work on the remaining nine titles.

 

The panel also approved by voice vote the 104-page manager's en bloc amendment dealing with pay caps and Chairman Collin Peterson's other priority issues. That amendment will now be sent to the House Rules Committee, where it will be joined with a proposal by the House Ways & Means Committee that would provide offsets for approximately US$4 billion in additional spending for nutrition programmes.

 

Additionally, the en bloc amendment includes language banning anyone whose three year adjusted gross income exceeds US$1 million from receiving farm programme and conservation payments.

 

The current cap on farm programme payments is US$2.5 million, unless 75 percent of the income is derived from agriculture or agriculturally related enterprises. The approved proposal would also eliminate payments to anyone whose AGI ranges from US$500,000 to US$1 million unless at least two-thirds of that amount is derived from farming.

 

Peterson said adjusting the income cap in this way would save US$226 million over five years. USDA has commented that the ban on those making US$1 million or more would  save US$10 million a year. Agriculture Deputy Secretary Chuck Conner earlier said fewer than 9,600 individuals fall into this income category.

 

Soybean farmers who were worried that their fixed annual payments might be cut are likely winners with this bill. Those payments are about the only type of crop subsidies that farmers are expected to get for the foreseeable future because of the sharp increases in soybean prices brought on by the upsurge in demand for bio-fuels.

 

Although there was talk early on of cutting the fixed payments to fund other programmes, the payments are left intact in the legislation.

 

Peterson and House Speaker Nancy Pelosi are now looking for time on the calendar for the whole House to consider the measure. Earlier, there were indications the proposed legislation could move to the House floor as early as Jul 26. It now appears more likely that the House will begin work on the bill the week of Jul 30, although other pressing House businesses could push consideration past the congressional summer recess and into September.

 

Peterson said he has a general commitment from Democratic leaders for floor time the week of Jul 30, just before the August recess. "It's going to be on the floor, unless something blows up. And it will take about a day," Peterson said. However, Pelosi said, "So much is on the table. I would hope to work on the farm bill. But we'll still have to see how the schedule works out."

 

Players in Iowa biodiesel industry form own organisation
 

Biodiesel producers, marketers and soybean farmers have formed their own organisation, separate from ethanol producers. The Iowa Biodiesel Board will be funded by soybean check-off money collected by the Iowa Soybean Association and by membership dues, said Randy Olson, executive director of the organisation.

 

Olson, who was senior marketing manager at the Iowa Soybean Association, said the board was created by demand from "the entire biodiesel chain" to promote biodiesel and work on industry issues and policies.

 

Iowa has 13 biodiesel plants in production with a capacity to produce 258.5 million gallons of biodiesel a year and three more under construction with a potential capacity of 95 million gallons.

 

Low soymeal stocks in South-east Asia
 

South-east Asia may become a prime import market for soymeal. Indian exports of soymeal are likely to fall to about 3.5 million tonnes in the crop year ending in September from 4.1 million tonnes in the year to September 2006, according to Rajesh Agrawal of the Indian Soybean Processors' Association. The high figures for the previous year are mainly because the country had large carryover stocks then.

 

"Right now, South-east Asian countries have low stocks, whether it be Taiwan, Thailand or Indonesia. The business will continue and there is no problem right now in the exporting of soymeal," Agrawal said. Soybean availability was tightening in those domestic markets as the current season draws to a close, he added.

 

High palm oil prices forcing buyers to switch to other oils
 

Malaysian crude palm oil (CPO) prices are getting so high that producers are seeing buyers switch to other oils. Malaysia's Plantation Industries and Commodities Minister Peter Chin said last week, "Once the prices of CPO and palm olein are too high, there is a tendency for consumers to switch to other oils that are less expensive".

 

In the past, CPO prices were typically lower than those of other oils. "But now the gap is closing. Because of that, there are cases of people switching to their traditional oils in Europe," he added, pointing out that there has been a slight decrease in CPO exports to the EU.

 

In related news, Indonesia may have produced less palm oil than expected in the first half of the year after a drought in 2006 hindered the crop's growth. Derom Bangun, President of the Indonesian Palm Oil Association, said palm oil production did not appear to be on course to produce the previously estimated 17.2 million to 17.4 million tonnes this year and is contributing to currently high prices.

 

U.S. & 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 12 July 2007

Country

Commodity

New

Accum.

 

Country

Commodity

New

Accum.

Sales

Exports

 

Sales

Exports

Belgium

Soybeans

4.3

228.2

 

Dom. Rep.

Soymeal

13.8

327.1

Canada

Soybeans

1.3

119.7

 

Honduras

Soymeal

4.2

109.3

China

Soybeans

5

11010.4

 

Israel

Soymeal

0.8

69.7

Colombia

Soybeans

2.6

271.8

 

Mexico

Soymeal

29

1084.7

Egypt

Soybeans

0.9

729.3

 

Canada

Soyoil

0.7

28.8

Guatemala

Soybeans

1

12.2

 

Guatemala

Soyoil

0.7

22

Indonesia

Soybeans

5.9

1377.5

 

Korea, Rep.

Soyoil

11

45

Japan

Soybeans

75.8

2757

 

Mexico

Soyoil

1.6

76.7

Mexico

Soybeans

22.8

3341

 

 

 

 

 

Taiwan

Soybeans

31.1

1678.8

 

Export Sales Totals (tmt)

Turkey

Soybeans

1.1

528.3

 

Commodity

Outstanding

Accum.

New

Algeria

Soymeal

14.5

34

 

Sales

Exports

Sales

Bulgaria

Soymeal

1

6.6

 

Soybeans

2,005.10

28,325.30

180.9

Canada

Soymeal

17.1

1051.2

 

Soymeal

1,273.40

5,301.60

101.7

Colombia

Soymeal

8.3

245.4

 

Soyoil

49.4

458.9

3.1

 

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