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| 6. September 2004 U.S. And China Still At Odds Over China‰s Import Regulations Acting Chinese Ambassador to the United States Lan Lijun last week offered U.S. trade officials additional assurances that new Chinese import regulations, known as Decree 73, will not disrupt U.S. soybean exports to China. However, the U.S. government is still pressing the Chinese government to revoke or suspend at least part of the new rules, according to an announcement by the Office of the U.S. Trade Representative (USTR) and USDA. Lan offered assurances to Chief USTR Agriculture Negotiator Allen Johnson and USDA Under Secretary J.B. Penn on the advice of Beijing, according to USTR and USDA. Lan said Decree 73 would not interfere with U.S. soybean exports to China, and that its purpose was to extend the validity of quarantine inspection permits from three to six months, a change that the U.S. supports. Johnson and Penn said these assurances are welcome, but that China should still suspend or rescind Decree 73 until it has property notified a revised measure to the World Trade Organization and considered the comments of its trading partners. Mississippi Delta Region Crops Show Promise The Mississippi delta region‰s soybean crop is showing signs of a huge yield and exceptional quality this year. Alan Blaine, soybean specialist at Mississippi State University said soybean yields in Mississippi are consistently reaching 3.36 and 4.04 tonnes per hectare throughout entire fields with some fields even reaching over 4.7 tonnes per hectare, he said. Arkansas has reported similar yields and quality. Blaine anticipates that overall, this year‰s harvest will set a new yield records for the state at possibly around 2.76 tonnes per hectare, higher than last year‰s yield of 2.62 tonnes per hectare, which is the record for Mississippi. USDA currently has Mississippi production pegged at 1.51 million tonnes with a 2.29 tonnes per hectare for 2004-05. Louisiana State University Agricultural Center has said that that like Arkansas‰s and Mississippi‰s crops, Louisiana‰s 2004-05 soybean crop also is showing very favorable yields despite having immense rainfall this year that flooded fields earlier in the year. USDA forecasts Louisiana‰s 2004-05 production to be 776,000 tonnes with a 2.01 tonnes per hectare yield. Brazil‰s Government Split On Viability Of GMO Bill Brazil will not issue another decree to temporarily lift the ban on the planting and sale of genetically modified soybeans for the upcoming season, presidential congressional liaison Aldo Rebelo said last week. However, Rebelo is confident that the Senate will pass the bill in time to allow soy growers to plant GMO soy legally this year. Members of the congress‰ government coalition disagree with the liaison‰s assessment of the situation. "There‰s not enough time for the bill to pass," said a spokesperson for Senator Ideli Salvatti, a Senate leader for the ruling Worker‰s Party from the southern state of Santa Catarina. "With municipal elections coming up, the Senate lacks the necessary quorum to pass the law," she added. Another obstacle is that once the Senate approves the bill, it must return to the lower house for approval. Meanwhile, Monsanto last week said it intends to appeal a legal ban in on sales in Brazil of genetically modified (GM) Roundup Ready soybeans after a court decision cleared the way for an appeal. A federal court in Brasilia now has published its June decision reinstating the power of Brazil‰s National Technical Committee on biosafety (CTNBio) to regulate genetically modified products. The decision ends a legal wrangle that started in 1998 when CTNBio waived a five-year environmental impact study and cleared Roundup soy for commercial use. However, the court‰s injunction on Roundup Ready soy remains in place. Monsanto said in a statement that the Federal Court‰s ruling that CTNBio can regulate genetically modified products should mean its original 1998 decision holds. Environmental Group Says Brazil‰s Soybean Farm Expansion Threatens Valuable Habitats
The huge expansion in soybean farming over the last few years is a significant threat to Brazil‰s environment and could cause irrevocable damage to the ecologically sensitive Brazilian savanna, The World Wide Fund (WWF) for Nature said last week. Fast-encroaching soybean plantations are cutting deep into Brazil‰s Cerrado region, and that by 2020, around 22 million hectares could disappear, the WWF said. "I don‰t think there‰s a perception that there‰s a problem," WWF spokesperson Leonardo Lacerda said. "And if there‰s no perception then there‰s no solution." The 202-million-hectare Cerrado savanna in Brazil‰s central interior represents roughly 25% of the country‰s total land area. "In terms of diversity it is even more important than Africa‰s savanna," said Lacerda. The Cerrado is home to many animals that live only in South America, including the anteater, the jaguar and the maned wolf.
The WWF believes that the destruction of the land is avoidable because other exporting countries such as the United States can meet soybean demand. The WWF also recommended Brazil use existing pastures that can be alternated with cattle ranching, rather than at the expense of valuable natural habitats. Soy Complex Lower As Threat Of Corn Belt Frost Diminishes The soy complex closed lower on September 2 as chances of a freeze next week in the Corn Belt declined. Soybean meal futures took the biggest hit as the oil share continued to climb. However, there still remains a threat of freezing temperatures this week in some of the northern regions of the Corn Belt as cold air for September 9 and 10 could only affect the areas of northern Minnesota and Wisconsin. If freezing temperatures hold off until normal frost dates, look for November futures to drop into the mid $5.00 area this fall. In the meantime, the market seems likely will maintain a sizable risk premium. September bean futures closed down $3.22, finishing at $230.66; November was $3.12 lower, closing at $231.02 and January lost $3.12 ending at $233.60. September meal was down $3.75, closing at $195.88; October was $4.30 lower, finishing at $194.00 and December decreased $4.52 ending at $195.99. September oil closed $2.87 lower to finish at $585.76; October was down $0.66, closing at $577.61; and December lost $4.19, ending at $568.35.
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