October 30, 2006

 

ASA weekly:  Brighter market for US soyoil; Soy could decide Brazil's next President; Bunge to expand crushing facility; August crush slightly low

 

 

The United States' soyoil market is facing a period of expansion in both domestic consumption and overseas exports, according to David Leishman, US agricultural attach¨¦ to the European Union.

 

"The soy area in the US has risen to 53.5 million hectares. The US consumption for soy and soyoil is rising and so is the soy yield per hectare. When aligned to improving technology and new products we see that there is scope for more exports from the US."

 

He adds: "There is little doubt that the high price of oil and diesel is driving US biodiesel production higher. Currently there are 86 such plants in the US and by 2007 another 13 will have come on-stream. All of this will lead to an estimated production capacity of 7.3 million cubic meters."

 

He pointed out that the importance of biofuels to the US government was emphasized by the fact that in the 2004 US Farm Bill some US$500 million had been earmarked for energy crops and this was expected to rise to US$1 billion in the 2007 Farm Bill.

 

Leishman emphasized that U.S. agriculture had always had an important role in supplying feed stocks for energy in the United States. However, if biofuel were to really compete with fossil fuels it would need government intervention in most countries including addressing security and trade issues regarding bioenergy.

 

Meanwhile, soy farmers could decide the result of Brazil's next election, according to a report from "The Public Ledger". Angered by the 40 percent drop in soy prices since 2003, higher diesel and fertilizer prices and double-digit interest rates imposed by the administration of President Luiz Inacio Lula da Silva, seven of Brazil's 10 main farming states chose the presidential challenger Geraldo Alckmin over Silva on Oct 1, helping to deny the president a first round victory.

 

Many experts however, feel Silva is not to blame for many of the farmers' problems since he can't control the international agricultural markets. Some key Brazilian soy growing regions, like Parana, have also suffered from dry weather.

 

In another development, Bunge North America has announced expanding the crush capacity of its soy processing plant in Council Bluffs, Iowa, by more than 299,000 tonnes a year to make it the biggest soy crushing facility in the country, with a capacity of 2.10 million tonnes a year. The expansion will be complete by 2008.

 

Bunge's Council Bluffs facility has ready access to two interstate highways and five rail lines enabling the plant to ship to both domestic and the international markets. The expansion will also increase the efficiency of the plant by bringing the processing capacity more in balance with the refining capacity.

 

The Census Bureau put the August crush at 3.87 million tonnes, slightly below where a survey of analysts estimated the same, at 3.91 million tonnes. Soyoil stocks were put at 1.35 million tonnes compared to estimates of 1.37 million tonnes while soymeal stocks were 290,000 tonnes, well above the analyst estimate of 233,000 tonnes.

 

Freight indices mixed

 

Depending on the mode, the key freight indices were mixed during September as reported by the Bureau of Statistics at the Department of Labour. The barge and rail indices were slightly higher while truck was lower. The rail index for September was about 156, up 1 percent from August 9 percent higher year-over-year. The truck index totalled 130 during September, down less than 1 percent from August, yet 3 percent higher from the previous  September. The inland towing industry reported an index of 192, up 1 percent from August and 17 percent higher year-over-year.

 

Freight pricing by truck and rail has steadily been rising while inland towing has displayed more significant increases and volatility as compared to truck and rail.

 

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	12,214	2,434	514	379	3,400	1,440	640
Production	85,013	83,368	86,779	39,000	40,500	41,300	53,000	55,000	56,000
Imports	152	109	109	708	900	950	353	86	100
Crush	46,160	47,320	48,308	29,560	32,600	33,700	29,730	28,000	27,300
Exports	30,011	25,800	31,162	10,548	7,400	7,000	22,798	25,550	26,700
Other	5,093	5,103	4,520	1,520	1,535	1,536	2,785	2,336	2,024
Usage	81,264	78,223	83,990	41,628	41,535	42,236	55,313	55,886	56,024
Carryout	6,960	12,214	15,112	514	379	393	1,440	640	716
Soymeal	thousand tonnes
Carryin	191	156	272	1,350	1,187	2,165	870	640	856
Production	36,936	37,342	38,360	23,347	26,101	26,548	22,928	21,874	21,435
Domestic use	30,446	30,255	30,935	537	573	602	9,162	9,556	9,511
Net Exports	6,525	6,971	7,425	22,973	24,550	25,800	13,996	12,102	12,220
Usage	36,971	37,226	38,360	23,510	25,123	26,402	23,158	21,658	21,731
Carryout	156	272	272	1,187	2,165	2,311	640	856	560
Soybean oil	thousand tonnes
Carryin	488	771	1,374	660	542	712	293	248	450
Production	8,781	9,228	9,099	5,404	6,228	6,397	5,708	5,352	5,233
Domestic use	7,910	8,119	8,709	408	433	563	3,059	3,168	3,205
Net exports	588	506	542	5,114	5,625	5,950	2,694	1,982	2,180
Usage	8,498	8,625	9,251	5,522	6,058	6,513	5,753	5,150	5,385
Carryout	771	1,374	1,222	542	712	596	248	450	298

 

USDA Export Sales (tmt) - Week of 19 October 2006
Country	Commodity	New Sales	Accum. Exports		Country	Commodity	New Sales	Accum. Exports
Barbados	Soybeans	1.70	2.20		Honduras	Soymeal	0.70	5.70
Canada	Soybeans	5.90	13.70		Jamaica	Soymeal	1.40	7.10
China	Soybeans	297.90	1493.70		Japan	Soymeal	9.10	6.80
Colombia	Soybeans	6.60	47.10		Mexico	Soymeal	38.40	50.90
Egypt	Soybeans	5.90	122.50		Morocco	Soymeal	5.50	0.00
Germany	Soybeans	118.10	184.10		New Zealand	Soymeal	4.50	0.00
Indonesia	Soybeans	10.00	194.80		OPAC Is.	Soymeal	0.90	0.00
Israel	Soybeans	8.00	57.10		Philippines	Soymeal	4.10	8.50
Japan	Soybeans	1.30	363.70		Turkey	Soymeal	0.50	15.50
Mexico	Soybeans	43.60	691.90		Canada	Soyoil	0.90	2.60
Netherlands	Soybeans	48.00	249.70		Ecuador	Soyoil	1.00	0.90
Philippines	Soybeans	0.50	11.50		Mexico	Soyoil	0.10	12.10
Spain	Soybeans	58.00	0.00
Taiwan	Soybeans	62.40	256.80
Turkey	Soybeans	0.20	176.40		Export Sales Totals (tmt)
Canada	Soymeal	22.10	83.50		Commodity	Outstanding Sales	Accum. Exports	New Sales
Colombia	Soymeal	2.50	7.20		Soybeans	8,438.70	4,172.00	627.10
Dom. Rep.	Soymeal	17.30	25.60		Soymeal	1,667.20	314.10	101.00
Egypt	Soymeal	0.60	17.00		Soyoil	83.90	23.20	2.00