August 13, 2007

 

ASA weekly: USDA report recap; Brazil continues environmental review of "soy highway"; Drought leads to cut in China's 2007 soybean production estimate

 

 

USDA report recap
 

USDA issued its August crop report and World Board supply and demand estimates on Aug 10. This crop report is USDA's initial NASS look at row crop yield prospects through survey and objective measurement.

 

The relatively early stage of 2007/08 crop development assures that subsequent estimates in September and beyond will add to accuracy as important crop filling weather lies ahead into October. 

 

US oilseed production for 2007/08 is projected at 80.2 million tonnes, down fractionally from last month as lower cottonseed production is nearly offset by higher peanut production. Soybean yields are forecast at 41.5 bushels/acre, 1.2 bushels/acre below last year. USDA forecasts US soybean production to be 71.6 million tonnes, 15.3 million tonnes below last year's crop. Soybean stocks are projected at 5.99 million tonnes.

 

Global oilseed production for 2007/08 is projected at 391.3 million tonnes, down 13.7 million tonnes from 2006/07. USDA also noted that soybean production for China is projected at 15.2 million tonnes, due to dry weather in the north-eastern producing area.

 

USDA also made changes in the 2006/07 crop estimates. These changes include a higher crush, reflecting stronger-than-expected domestic soymeal disappearance and exports. With higher use, carryover for 2006/07 is now estimated to be 15.6 million tonnes.

 

Biodiesel production slips; US export market remains strong
 

Soyoil used in biodiesel during June dropped to 115,000 tonnes from May consumption of 123,000 tonnes that was revised higher by 12,700 tonnes.

 

Poor biodiesel margins are limiting production to less than 50 percent of capacity that now tops 1 billion gallons. There is at least that much more capacity in various stages of construction. With soyoil stocks estimated at a record 1.54 million tonnes at the end of June, the US could afford to allow more biodiesel production to occur in the near term. Instead, soyoil prices have mirrored the petroleum market in order to narrow biodiesel margins and thereby rein in the expansion in biodiesel production.

 

The best market for biodiesel has been the export market, namely to the EU. Biodiesel exports were more than 50 percent of April and May biodiesel production. Soyoil prices have not been so high as to discourage soyoil exports that are now forecast to reach 805,000 tonnes in 2006/07, the largest since 2002/03.

 

On the business side of bio-fuels, after two years of waiting, Soy Energy L-L-C has finally broken ground on its new 30 million gallons a year biodiesel plant near Marcus, Iowa. The US$58 million plant is scheduled to start production in early-2008, with over 900 local investors. It will create at least 24 new jobs. Soy Energy also plans to add a crushing plant in phase two.

 

USDA secretary may be close to decision on CRP opt-out
 

USDA Secretary Mike Johanns earlier this year said he needed "fresh information" to make a decision on whether he would allow eligible Conservation Reserve Program (CRP) contract holders the opportunity to exit the programme early without penalty - the so-called opt-out decision.

 

Last week's USDA Crop Production report, along with the prior June Acreage estimates, are some of the "fresh information" Johanns mentioned for the CRP decision. However, Johanns may still wait until after the September Crop Production report before making a final CRP decision. Many analysts believe it is Johanns' inclination not to offer an early out-without-penalty option.

 

This is not just a corn acreage decision for 2008 plantings, because soybean and wheat markets are currently indicating the need for more planted acres for the 2008 season.

 

Also, political and farm policy considerations may impact Johanns' decision. For example, some observers said Johanns would not likely want to allow CRP contract holders an early out-without-penalty option just ahead of coming new farm bill conservation programme negotiations via the House-Senate conference.

 

Brazil continues environmental review of "soy highway"
 

Brazil's environmental protection agency, Ibama, said that it intends to complete its environmental impact study on a controversial Amazon highway by Aug 21. Dow Jones Newswires noted that BR-163 -- a mostly decrepit two-lane highway that connects north Mato Grosso state to the massive Amazon region of Para -- is seen as a cheap transport route for soybeans out of the Amazon River port of Santarem.

 

The road, nicknamed the "soy highway", is over 800 kilometres (500 miles) long and is awaiting Ibama's green light before it gets paved. A paved road would cut transport costs by roughly US$2 a 60-kilogram bag of soybeans for soybean farmers in northern Mato Grosso, Brazil's largest soybean producing state, making it easier for them to invest in soybean expansion.

 

Farmers and some industry leaders have urged the government to improve road conditions for the past 10 years in that part of the country, but environmental permits have stalled the BR-163 project in particular due to its location in the heart of the Amazon rainforest.

 

Drought leads to cut in China's 2007 soybean production estimate
 

The China National Grain and Oils Information Centre has cut its 2007 soybean output forecast to 14.8 million tonnes because of an ongoing drought, according to its monthly report.

 

The government think tank previously expected soybean output to be 15 million tonnes in 2007. A drought that began in July has hit China's north-east -- a major soybean and corn growing region -- but only about 10 percent of corn acreage in Heilongjiang province is affected by a rare drought in the west of the province, it said.


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 02 August 2007

Country

Commodity

New

Accum.

 

Country

Commodity

New

Accum.

Sales

Exports

 

Sales

Exports

Canada

Soybeans

1.5

122.2

 

Mexico

Soymeal

27.3

1190.1

China

Soybeans

115.7

1139.6

 

Nicaragua

Soymeal

2.8

59.4

Japan

Soybeans

1.2

2927.4

 

Panama

Soymeal

0.5

120.9

Malaysia

Soybeans

2.6

286

 

Philippines

Soymeal

9.9

353.4

Mexico

Soybeans

20.2

3582.1

 

Salvador

Soymeal

2

20.6

Taiwan

Soybeans

14.2

1776.9

 

Canada

Soyoil

5

135.2

Vietnam

Soybeans

9.7

10.3

 

China

Soyoil

5

135.2

Canada

Soymeal

14.7

1135.6

 

Mexico

Soyoil

4

79.9

Colombia

Soymeal

6.1

252.2

 

 

 

 

 

Cuba

Soymeal

2

127.2

 

Export Sales Totals (tmt)

Honduras

Soymeal

1.8

113.8

 

Commodity

Outstanding

Accum.

New

Indonesia

Soymeal

4.8

57.2

 

Sales

Exports

Sales

Israel

Soymeal

6.4

76.1

 

Soybeans

1,852.60

29,104.60

153.3

Japan

Soymeal

12.5

314.2

 

Soymeal

1,139.30

5,725.00

116.4

Malaysia

Soymeal

2.7

9.4

 

Soyoil

123.3

472.3

29.6

 

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