August 20, 2007

 

ASA weekly: US farm bill update; Soymeal garnering support from high EU grain prices; Freight demand turns lower; China boosts soybean import expectations
 

 

Farm bill update
 

Senate Agricultural Committee members received farm bill discussion drafts from Agricultural Committee Chairman Tom Harkin. While the drafts have not been made public, Senator Chuck Grassley talked about them last week.

 

The proposed language would increase conservation programme spending and would place a tighter cap on farm programme payments. Grassley said, "There's not a wide difference between what Harkin wants to accomplish in the way of commodity titles and what I want to accomplish."

 

Grassley added that he would push for a tighter cap on subsidy payments than the US$1 million income cap that the House-passed farm bill includes. Grassley also said he would not support any farm bill budget offset that included changing tax laws, as was done with the House farm bill measure. Harkin's chairman's mark will be released publicly when the Senate returns in early September.

 

Meanwhile, Senator Norm Coleman talked about the farm bill last week in Minnesota. The Senate will pass a new farm bill by the end of the year, and farmers will be pleased with the legislation, Coleman said. He praised the work of Collin Peterson, chairman of the House Agriculture Committee, in crafting the House legislation.

 

Coleman said the Senate version will resemble the House version and that he will work to ensure the Senate version contains provisions for permanent disaster aid and crop insurance.

 

Soymeal garnering support from high EU grain prices
 

Soaring grain prices in the EU due to a disappointing wheat harvest and a drought-stressed corn crop have caused soymeal to become more competitive with grain in the EU.

 

This is similar to the environment that existed prior to the CAP reform of the early 1990s. Given the potential for the EU to import more soybeans and/or soybean meal to displace grain feeding at current price relationships, soybean meal prices have little downside risk unless EU grain prices decline from their lofty levels.

 

Freight demand turns lower
 

The movement of freight by truck, rail, water and pipeline during June was down 3.4 percent. This was the largest monthly drop since November 2006 with demand down nearly 5 percent. July and August are traditionally slow months and will likely be reflected as such. The autumn months usually rebound on peak movement of goods and supplies for back to school, autumn holidays and Christmas. The slower movement is confirmed through lower barge and rail volumes.

 

Bio-fuel business briefs
 

Biofuel Industries Group's NextDiesel plant has opened in an industrial area of Adrian, Michigan. Jason Eisenberg, the company's director of business development, said that initially, the plant would produce 20 million gallons a year, almost exclusively from soyoil. The firm plans to double the capacity before the year's end.

 

Eisenberg added that the facility is only the second active producer of biodiesel in Michigan. In addition to soyoil, the plant is designed to refine chicken and beef fat and recycled vegetable oil, enabling it to take advantage of price fluctuations in raw materials, he explained.

 

However, Dan Secord, General Manager, said the product needs to meet quality standards and be priced competitively. "But, we stay strictly with soy-based products," he added.

 

Other developments include:

• Imperium Renewables has officially celebrated the opening of its Imperium Grays Harbor biodiesel facility. With an annual capacity of 100 million gallons a year, it is the largest biodiesel production facility in the United States.
   
• The production facility has the capacity to produce up to 100 million gallons of biodiesel fuel, and is capable of storing up to 17 million gallons of biodiesel and feedstocks.
   
• Nova Biosource Fuels has entered into an asset purchase agreement to acquire the 10 million gallon a year biodiesel refinery that was designed and built by Nova for Clinton County Bio Energy in Clinton, Iowa.

The plant was the first commercial scale biodiesel refinery to use Nova's proprietary process technology. Nova commenced construction in March 2006 and the refinery has since produced more than 4 million gallons of biodiesel made from soyoil and other low free fatty acid feedstocks.

 

China boosts soybean import expectations
 

Chinese soybean imports in 2007/08 will reach some 31.5 million tonnes, up 11.3 percent year-on-year, according to latest figures from the China National Grain and Oils Information Centre (CNGOIC).

 

Chinese soybean production has been hit by drought this year and is likely to fall some 7.3 percent to 14.8 million tonnes, prompting moves to import in order to ensure supplies.

 

Imports in the current year were seen at 28.3 million tonnes, about the same as the previous year, after a widespread pig disease hit soymeal demand, CNGOIC said. The centre also estimated soyoil imports to rise to 2.9 million tonnes in 2007/08, higher than 2.5 million tonnes estimated for the current year.

 

Feed demand in 2007/08 will likely rise by 3 percent to 96 million tonnes, according to CNGOIC. The feed industry was likely to use 1.6 percent less corn in the current year at 93 million tonnes because high prices and blue ear pig disease have curbed demand, CNGOIC 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	6,960	12,229	15,660	514	672	2,816	1,638	2,252	2,578
Production	83,368	86,770	71,448	40,500	47,200	47,000	57,000	59,000	61,000
Imports	92	109	109	1,013	1,800	1,800	40	100	50
Crush	47,324	48,852	48,988	32,740	35,600	38,750	28,756	29,300	29,300
Exports	25,579	29,937	27,760	7,130	9,700	10,300	24,770	26,500	29,200
Other	5,288	4,659	4,477	1,485	1,556	1,600	2,900	2,974	3,000
Usage	78,191	83,448	81,225	41,355	46,856	50,650	56,426	58,774	61,500
Carryout	12,229	15,660	5,992	672	2,816	966	2,252	2,578	2,128
Soymeal	thousand tonnes
Carryin	156	285	272	671	1,132	1,132	640	694	744
Production	37,416	38,575	38,859	25,737	28,035	30,519	22,300	23,175	22,735
Domestic use	30,114	30,981	31,525	584	600	640	10,173	10,745	11,100
Net Exports	7,173	7,607	7,334	24,692	27,435	29,564	12,073	12,380	11,770
Usage	37,287	38,588	38,859	25,276	28,035	30,204	22,246	23,125	22,870
Carryout	285	272	272	1,132	1,132	1,447	694	744	609
Soybean oil	thousand tonnes
Carryin	771	1,365	1,388	95	92	121	248	250	331
Production	9,248	9,217	9,267	6,085	6,622	7,220	5,521	5,740	5,625
Domestic use	8,147	8,460	9,027	424	656	775	3,222	3,421	3,510
Net exports	507	734	619	5,664	5,937	6,470	2,297	2,238	2,187
Usage	8,654	9,194	9,646	6,088	6,593	7,245	5,519	5,659	5,697
Carryout	1,365	1,388	1,009	92	121	96	250	331	259

 

USDA Export Sales (tmt) - Week of 09 August 2007

		New	Accum.				New	Accum.
Country	Commodity	Sales	Exports		Country	Commodity	Sales	Exports
Canada	Soybeans	1.1	124.1		Mexico	Soymeal	4.1	1224.7
China	Soybeans	110	11141.2		Panama	Soymeal	0.5	120.9
Colombia	Soybeans	9.9	313.1		Philippines	Soymeal	4.8	357.8
Egypt	Soybeans	0.4	753.4		Taiwan	Soymeal	1	6.7
Indonesia	Soybeans	1.7	1423.7		Canada	Soyoil	0.3	30.9
Japan	Soybeans	1.8	2944.4		Cuba	Soyoil	5.2	8.4
Mexico	Soybeans	27.3	3618.1		Mexico	Soyoil	0.4	80.6
Netherlands	Soybeans	6.8	1442.2		Morocco	Soyoil	10	19.9
Taiwan	Soybeans	25.3	1842.6		Venezuela	Soyoil	4	0
Canada	Soymeal	7.6	1158.8
Colombia	Soymeal	19.7	269.1		Export Sales Totals (tmt)
Ecuador	Soymeal	14	71.5			Outstanding	Accum.	New
Indonesia	Soymeal	5.5	59.6		Commodity	Sales	Exports	Sales
Jamaica	Soymeal	4.2	93.6		Soybeans	1,914.50	29,278.80	236.1
Japan	Soymeal	1	314.5		Soymeal	1,114.70	5,838.00	88.4
Lebanon	Soymeal	7.1	23		Soyoil	133.5	477.3	15.2