October 25, 2005
ASA Weekly: Prospects good for US soyoil in 2006; US soymeal prices weakened by large supplies
Prospects good for US soyoil in 2006; meal prices weakened by large supplies
US soybean oil use could grow in spite of higher prices next, according to the latest Oil Crops Outlook from USDA.
"The market's anticipation that more soybean oil could be used for bio-diesel production next year is placing a floor under current values," said USDA.
"Optimism about bio-diesel is being encouraged by its improved production incentives and competitiveness with petro-diesel prices. Bio-diesel producers can now claim an exemption off the federal excise tax of 1-cent-per-gallon for each percentage point of its inclusion in fuel. There are also new quantity standards for the annual use of all bio-fuels nationally and specifically for bio-diesel in Minnesota."
As for soyoil exports, USDA said stronger domestic consumption and prices and the potential competition from Argentine processors might moderate commercial demand for US oil.
USDA said the price for US soybean meal would be affected by both its own rising supply and by record-large amounts of protein feed substitutes.
"As of Sep 1, the total number of US hogs and pigs was unchanged from a year earlier. So, if hog feed consumption would be mostly dependent on raising the animals to heavier weights, it may not expand by very much. The poultry sector is likely to account for most of the gains in soybean meal consumption next year. Production of broiler chickens in 2006 is expected up 3 percent."
"One supportive factor for soybean meal use and values may be the recent proposal by the Food and Drug Administration to further tighten its restrictions on the protein materials from cattle that are allowed throughout US livestock feeds," USDA said.
As for soymeal exports, USDA said they should benefit from a lower price level and reduced competition from India.
USDA said rust threat "diminished"
USDA said this year's Asian rust threat to production has largely dissipated.
"As the growing season has finished or nearly finished in most regions, the threat of rust has diminished," said USDA in a national rust commentary. "It may be expected that rust will continue to be found in more counties within states already reporting rust and in adjacent states without causing any economic damage."
Agricultural spending cuts move from senate committee to floor
The Senate Agriculture Committee last week approved a package of $3 billion of agriculture spending cuts, as required by the budget plan of earlier this year. The package would reduce commodity payments by US$1.3 billion over five years and conservation programs by US$1.1 billion, but did not include the controversial prospect to cut feeding programs.
The committee also added a provision late in the process that would reduce the advance income support payments for the 2006 crop year and for each of the 2007-11 crop years. This will save almost US$1 billion over five years, according to committee and Congressional Budget Office estimates, but is being strongly criticised as a budget gimmick weaker than a real cut.
The committee's package now goes to the Senate floor. Senator Chuck Grassley (R-Iowa) plans to propose tightening limits on subsidies that go to large farms, in spite of the lack of support for the proposal in committee.
At the same time, the House is considering a bigger cut in agriculture spending (US$4.25 billion) to help pay for Hurricane Katrina relief, according to a spokeswoman for the House Agriculture Committee.
Asked by reporters if Senate would seek additional mandatory budget cuts beyond the US$34.7 billion figure in the FY2006 budget resolution, Senate Agriculture Committee Chairman Saxby Chambliss (R-Ga.) said that Senate Majority Leader Bill Frist (R-Tenn.) has charged all committees to come up with additional mandatory spending cuts, to look beyond the US$34.7 billion in cuts over five years that is part of the FY2006 budget resolution."We would like to get it to US$50 billion, but I think that will be very difficult to do."
Meanwhile, House Speaker Dennis Hastert (R-Ill.) has asked his committee chairmen to develop recommendations for a US$50-billion package of budget cuts.
Tensions over Doha negotiations regarding agriculture has pressed Chambliss to make it clear to USTR Rob Portman and Agriculture Secretary Mike Johanns that if the US agrees to reduce the amount of government payments to farmers, "there has to be significant movement on the part of Europeans and positive reactions from our friends in Brail and other developing countries".
He added that if the EU reacts favourably to the US offer to cut farm subsidies by agreeing to increase to European markets, "then the proposal Portman put forward would be a huge benefit to US farmers".
Chambliss acknowledged that some parts of the US proposal would mean changes in US programmes.
"That is okay," he said. "We know the next farm bill will look different from the current farm bill, but I want to make sure we have the flexibility to write the farm bill so it is beneficial to US farmers. Everything Johanns and Portman have been talking about gives us that framework in writing the farm bill."
India raises palm oil base import price; demand may shift to soyoil
Last week, the Indian government's raised the base import price for edible oils. Some local observers feel this may lead to a shift in demand in favour of crude soybean oil.
The government has revised the base price for crude palm oil to US$426/tonne, nearly US$20/tonne higher than the current market price, in a move that has effectively increased the tax on imports.
"The market never went to the level at which the base import price of crude palm oil has been fixed... . Traders and refineries will definitely prefer importing more soyoil than palm oil," said Sandeep Bajoria, president of the Central Organization of Oil Industry and Trade, a group of domestic edible oils manufacturers and traders.
At a time when the rupee is strengthening against the US dollar, an artificially high base import price will add to the cost of importing palm oil and divert demand toward soyoil, said Sat Narain Agarwal, general secretary of Rajdhani Vegetable Oils Suppliers Association.
|
US & South America Soybean/Products Balance | |||||||||
|
US |
Argentina |
Brazil | |||||||
|
Actual |
Estimate |
Proj. |
Actual |
Estimate |
Proj. |
Actual |
Estimate |
Proj. | |
|
2003/04 |
2004/05 |
2005/06 |
2004/05 |
2005/06 |
2006/07 |
2004/05 |
2005/06 |
2006/07 | |
|
Soybeans |
thousand tonnes | ||||||||
|
Carryin |
4,853 |
3,059 |
8,029 |
1,630 |
2,046 |
3,670 |
3,129 |
2,086 |
934 |
|
Production |
66,778 |
85,484 |
77,740 |
33,000 |
39,000 |
39,000 |
50,500 |
51,000 |
60,000 |
|
Imports |
151 |
136 |
108 |
540 |
530 |
485 |
350 |
470 |
200 |
|
Crush |
41,631 |
46,267 |
45,858 |
25,072 |
26,800 |
28,500 |
29,172 |
29,000 |
31,583 |
|
Exports |
23,946 |
29,801 |
30,345 |
6,500 |
9,311 |
9,800 |
19,571 |
20,300 |
23,200 |
|
Other |
3,146 |
4,582 |
4,095 |
1,552 |
1,795 |
2,010 |
3,150 |
3,322 |
3,575 |
|
Usage |
68,723 |
80,650 |
80,298 |
33,124 |
37,906 |
40,310 |
51,893 |
52,622 |
58,358 |
|
Carryout |
3,059 |
8,029 |
5,579 |
2,046 |
3,670 |
2,845 |
2,086 |
934 |
2,776 |
|
Soymeal |
thousand tonnes | ||||||||
|
Carryin |
200 |
191 |
236 |
347 |
354 |
529 |
763 |
532 |
300 |
|
Production |
32,953 |
36,863 |
36,355 |
19,807 |
21,172 |
22,515 |
22,920 |
22,852 |
24,792 |
|
Domestic use |
28,590 |
30,300 |
30,708 |
700 |
850 |
950 |
8,784 |
8,950 |
9,450 |
|
Net Exports |
4,372 |
6,518 |
5,656 |
19,100 |
20,147 |
21,704 |
14,367 |
14,134 |
15,192 |
|
Usage |
32,962 |
36,818 |
36,364 |
19,800 |
20,997 |
22,654 |
23,151 |
23,084 |
24,642 |
|
Carryout |
191 |
236 |
227 |
354 |
529 |
390 |
532 |
300 |
450 |
|
Soybean oil |
thousand tonnes | ||||||||
|
Carryin |
676 |
488 |
781 |
99 |
74 |
100 |
150 |
93 |
120 |
|
Production |
7,748 |
8,764 |
8,607 |
4,513 |
4,824 |
5,130 |
5,258 |
5,220 |
5,685 |
|
Domestic use |
7,651 |
7,847 |
8,006 |
140 |
145 |
155 |
2,710 |
2,785 |
2,920 |
|
Net exports |
285 |
624 |
651 |
4,398 |
4,653 |
5,000 |
2,605 |
2,408 |
2,735 |
|
Usage |
7,936 |
8,471 |
8,657 |
4,538 |
4,798 |
5,155 |
5,315 |
5,193 |
5,655 |
|
Carryout |
488 |
781 |
731 |
74 |
100 |
75 |
93 |
120 |
150 |
|
USDA Export Sales (tmt) - Week of 13 October 2005 | ||||||||
|
|
New |
Accum. |
|
New |
Accum. | |||
|
Country |
Commodity |
Sales |
Exports |
|
Country |
Commodity |
Sales |
Exports |
|
Bangladesh |
Soybeans |
6 |
0 |
|
Indonesia |
Soymeal |
0.1 |
1.9 |
|
Canada |
Soybeans |
15.6 |
21.7 |
|
Mexico |
Soymeal |
36.9 |
58.2 |
|
China |
Soybeans |
477.5 |
995.6 |
|
Nicaragua |
Soymeal |
3.8 |
6.2 |
|
Costa Rica |
Soybeans |
30.7 |
21.2 |
|
OPAC Is. |
Soymeal |
0.2 |
0.8 |
|
Cuba |
Soybeans |
0.3 |
20.3 |
|
Panama |
Soymeal |
10.7 |
4.2 |
|
Indonesia |
Soybeans |
7.6 |
160 |
|
Saudi Arabia |
Soymeal |
10.9 |
24.1 |
|
Japan |
Soybeans |
91.1 |
155.9 |
|
Venezuela |
Soymeal |
4 |
4 |
|
Korea, Rep. |
Soybeans |
105 |
0 |
|
Hong Kong |
Soyoil |
0.1 |
0.1 |
|
Mexico |
Soybeans |
76.5 |
341.8 |
|
Kuwait |
Soyoil |
0.2 |
0.2 |
|
Netherlands |
Soybeans |
8.2 |
75.5 |
|
Mexico |
Soyoil |
5.4 |
3.1 |
|
Philippines |
Soybeans |
29.9 |
16.4 |
|
Qatar |
Soyoil |
0.1 |
0.1 |
|
Singapore |
Soybeans |
56 |
0 |
|
Trinidad |
Soyoil |
0.1 |
0.1 |
|
Taiwan |
Soybeans |
1.2 |
138.7 |
|
Export Sales Totals (tmt) | |||
|
Turkey |
Soybeans |
3.9 |
24.8 |
|
|
Outstanding |
Accum. |
New |
|
Canada |
Soymeal |
35.4 |
46.8 |
|
Commodity |
Sales |
Exports |
Sales |
|
Guatemala |
Soymeal |
4.7 |
12.9 |
|
Soybeans |
5,986.80 |
2,131.90 |
888.8 |
|
Honduras |
Soymeal |
6.6 |
6.6 |
|
Soymeal |
1,030.20 |
200.6 |
119.9 |
|
Hong Kong |
Soymeal |
0.1 |
2 |
|
Soyoil |
76.5 |
5.6 |
-1.4 |
