2004-05 U.S. Soybean Stocks Up 127% Over Previous Year’s Level

USDA released its estimates of 2004-05 ending U.S. soybean stocks on September 30. The soybean stocks estimate of 6.97 million tonnes, up 127% from a year ago, but much lower than the roughly 7.97 million tonne pre-report estimate. Of the USDA estimate, 2.71 million tonnes were on farms and 4.25 million tonnes were off-farm stocks. The on-farm total was 237% higher than a year ago and the off-farm total was 88% higher than a year ago, USDA said.

USDA lowered its 2004 crop estimate, but the implied residual loss for the quarter and season remains unusually large. This may lead analysts to boost residual usage estimates for 2005-06 and question further the accuracy of the 2004 crop estimate. However, 6.97 million tonnes will become the starting stocks level for the 2005-06 season with attention now centering on the 2005 crop estimate.

Harvest reports point to a potentially major upward revision of the U.S. 2005 soybean crop estimate in coming reports, according to analysts. Therefore, market rallies are likely to be met with expanded producer selling, limiting any gains.

USDA To Provide Transportation Differentials

USDA announced last week it would provide transportation differentials to cover the cost of moving grain across other modes and handling locations. “These actions, in conjunction with the tremendous work being performed by the U.S. Army Corps of Engineers, will help the transportation system return to normal as quickly as possible,” said Agriculture Secretary Mike Johanns. “The drought is contributing to the stress along the Mississippi River by decreasing the flow, so we are encouraging alternative routes and means of transportation in addition to the steps we are taking to relieve the pressure on farmers and related businesses.”

USDA is providing a temporary incentive to assist immediate movement of around 140 barges of damaged corn out of New Orleans to up-river locations. Once unloaded, the empty barges will continue up the river to load and begin moving new-crop commodities. In addition, to help producers deliver and sell crops in the absence of barge transportation caused by the hurricane, USDA also will pay incentives for alternative storage of up to 50 million bushels of grain. These actions are expected to ease pressure on producers to market commodities under adverse conditions.

To reduce stress on the central Gulf transportation and handling system, USDA will provide a transportation differential to cover the costs of moving grain to other river transportation modes and handling and locations. USDA will also allow producers forfeiting commodities to USDA the opportunity to buy back the grain when their farm-stored loans mature at the end of September and October. This opportunity to purchase is offered on a state-by-state basis and will be available for 60 days at the posted county price. These producers typically would be required to immediately move the forfeited commodity to commercial warehouses. This would reduce the pressure on commercial storage availability, according to USDA.

Disappointing Fertilizer Sales Could Signal Tough Times Ahead For Brazilian Farmers

Brazil’s National Fertilizer Distributors Association (ANDA) said last week that Brazilian fertilizer sales in the first eight months of 2005 are 21% lower than last year. ANDA said this is a sign of a tough year ahead for Brazil’s soy producers because it shows a lack of financing for producers.

According to ASDA, a main factor behind the reduction in demand is that major companies, such as Bunge and Cargill, aren’t offering many forward soy sales deals in which the company delivers crop inputs to farmers before the harvest and then pays on delivery of the product. ANDA also said a lot of defaults on these deals in 2004 and the general negative outlook for the market this year are cited as the main reasons for this. Normally these deals account for approximately 20% of all sales. Sales in August totaled 2.55 million tonnes, down 3.4% on the same period the year earlier, ANDA said.

India Raises Import Base Price For Soybean Oil

India has marginally raised the base import prices for and soybean oil and palm oil. According government announcement last week, the base import price of crude palm oil has been raised to $402 a tonne; refined, bleached and deodorized palm oil to $420/tonne; and RBD palm olein to $430/tonne. The price of crude soybean oil has been raised to $508/tonne, the notification said. India’s federal government sets base import prices for edible oils and import duties are calculated from these prices regardless of the actual price at which importers buy the commodity.

ARS Develops Soybean With SCN And Pathogen Resistance

The Agricultural Research Service (ARS) and the Tennessee Agricultural Experiment Station in Knoxville have developed new breeds of soybean that have broad resistance to multiple races of soybean cyst nematode (SCN). This is the most destructive soybean pest in the United States, causing an annual estimated loss of $1.1 billion.

The new soybean, currently named JTN-5303, yields significantly higher than the popular breeds Hartwig, Fowler and Anand, and has resistance to widespread nematode populations. The breeds also have shown resistance to several fungal pathogens, including sudden death syndrome, stem canker, and frogeye leaf spot, with moderate resistance to charcoal rot. Previous lines have never had this unique combination of resistance to both SCN and pathogens. The new lines are well adapted to production in the Mid South, according to the ARS and Tennessee researchers.

The soy complex closed mostly higher on September 29 ahead of the September 30 USDA grains stocks report. The Census Crush came in at 3.55 million tonnes, which is slightly above expectations and that is possibly another reason why the opening was a bit firmer that many expected. However, at the close of trading, a reversal in the energy complex combined with expectations of a resumption harvest progress rekindled selling pressure. November bean futures closed down $0.83 finishing at $205.95; January was $0.73 lower, closing at $209.53; and March lost $0.73 ending at $212.47. October meal was down $2.65, closing at $184.19; December was $1.87 lower, finishing at $187.61; and January decreased $1.87 to finish at $189.38. October oil closed $2.87 higher to finish at $497.14; December decreased $3.97, closing at $503.97; and January gained $3.97, ending at $508.38.