November 21, 2006

 

ASA weekly: Positive US soy export prospects; biodiesel to have major impact on US economy; Brazil's planting area continues to decline

 

 

For 2007-08, US soy exports should be strong as South American soy stocks are likely to be little changed from the last two years. Declining Brazilian soy plantings the last two years have stopped the ongoing growth in the quantity of South American soy that were carried over into the start of the US marketing year.

 

After being undermined during the first half of 2005-06 owing to unprecedented South American competition and disappointing world import demand, US exports thus far in 2006-07 have been record large. This can be attributed to a rebound in world import demand and South American competition that is no stronger than a year ago.

 

The year 2007-08 holds similar prospects with South American soy stocks projected to be no larger than the previous year given assuming industry estimates that Brazil's planted area will be 7 percent lower than last year.

 

Meanwhile, the National Biodiesel Board has released a new economic study highlighting how biodiesel plants are a boon to the US economy.

 

According to the economic analysis, some of the economic benefits of biodiesel include: America's biodiesel industry to add US$24 billion to the country's economy between 2005 and 2015, assuming biodiesel growth reaches 650 million gallons of annual production by 2015; and biodiesel production to create a projected 39,102 new jobs in all sectors of the economy.

 

Additional tax revenues from biodiesel production will keep US$13.6 billion in the US that would otherwise be spent on foreign oil. According to the study, if 498 of the 650 million gallons of estimated biodiesel demand in 2015 are produced from soyoil, farmer-level soy prices will go up nearly 10 percent and increased biodiesel demand can increase average soy prices US$0.58 per bushel by 2015.

 

In another update, Brazilian soy planting estimates continue to decline in area with the average being 6.5 percent (or 1.5 million hectares).

 

On November 10, the CONAB estimated this season's soy area to range from 20.7 million to 21.1 million hectares as against its October range of 20.5 million to 21.1 million hectares.

 

The US agricultural attache estimated soy-planting area to be about 6.8 percent below last year's.

 

Weather has favoured Brazil's soybean planting, which is currently about one week ahead of average. While soy planting in Rio Grande do Sul and Parana may show a slight increase, that in the Centre West region may decline about 15 percent with Mato Grosso's area expected to decline by roughly 15 percent.

 

Russia WTO accession to benefit US farmers

 

Russia and the US have agreed in principle on the terms for Russian entry into the WTO after nearly 13 years of talks. The deal will be signed in Hanoi at the Asia-Pacific Economic Cooperation summit.

 

The bilateral understanding is important because Russia is the largest overseas market for US poultry and the overall Russian market for US agricultural products is valued at nearly US$1 billion.

 

Russian tariff reductions included in the bilateral agreement "will benefit US farmers, ranchers, and food processors of wheat, corn, barley, dairy, soybeans, soybean meal, soybean oil, pork, beef and poultry, among others, once Russia joins the WTO" according to the USTR statement.

 

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 09 November 2006
		New	Accum.				New	Accum.
Country	Commodity	Sales	Exports		Country	Commodity	Sales	Exports
Canada	Soybeans	4.60	44.10		Hong Kong	Soymeal	1.00	3.50
China	Soybeans	239.90	3377.70		Honduras	Soymeal	4.90	10.10
Costa Rica	Soybeans	8.00	48.80		Israel	Soymeal	22.50	22.40
Cuba	Soybeans	33.00	31.00		Jamaica	Soymeal	0.20	14.40
Egypt	Soybeans	98.50	198.00		Lebanon	Soymeal	8.40	8.40
Germany	Soybeans	89.90	321.30		Mexico	Soymeal	39.40	108.20
Indonesia	Soybeans	68.20	359.10		Canada	Soyoil	0.70	4.30
Japan	Soybeans	30.40	538.80		Dom. Rep.	Soyoil	2.00	0.00
Korea, Rep.	Soybeans	23.80	123.60		Hong Kong	Soyoil	3.00	0.20
Mexico	Soybeans	64.30	905.30		Korea, Rep.	Soyoil	12.00	9.50
Netherlands	Soybeans	69.40	431.50		Export Sales Totals (tmt)
Taiwan	Soybeans	45.30	373.50			Outstanding	Accum.	New
Thailand	Soybeans	4.90	191.50		Commodity	Sales	Exports	Sales
Canada	Soymeal	35.20	161.90		Soybeans	7,080.10	7,632.30	696.40
Dom. Rep.	Soymeal	40.70	66.80		Soymeal	1,751.80	685.80	132.70
Guatemala	Soymeal	3.60	61.90		Soyoil	60.80	70.10	18.00