Record U.S. Soybean Exports Expected

U.S. soybean exports for 2004-05 could reach a new record level of 29.4 million tonnes, USDA said in its monthly supply and demand report. USDA raised the export forecast because of particularly strong sales to China and diminishing competition from other exporters such as Brazil. “ U.S. soybean commitments to China total...423 million bushels [11.5 million tonnes] through March,” USDA said. Soybean ending stocks for 2004-05 are projected at 10.2 million tonnes, the highest since 1986-87.

USDA estimates China 2004-05 soybean imports to be 22.8 million tonnes. Soybean exports from South America, meanwhile, could be lower than expected because of “reduced supplies” there, USDA said. Global oilseed production for 2004-05 is projected at a record 382.8 million tonnes. Global soybean production is expected to be 219.2 million tonnes, according to USDA. Global soybean stocks are projected at 52.6 million tonnes, 15.2 million tonnes more than in 2003-04. USDA also said Brazil’s soybean crop should be a record 54 million tonnes despite the effects of drought, especially in the southern producing areas. The export forecast for Brazil was lowered to 20.25 million tonnes.

Mercosur Rejects Monsanto’s Attempt To Collect Royalties On Soybeans

Agriculture ministers and senior officials from the Southern Common Market (Mercosur) have rejected Monsanto’s bid to collect unpaid royalties on soybean shipments, the Argentine government said. After Monsanto notified Argentine exporters it would sue in European courts in a bid to collect royalties that were not paid when the seed was planted. Argentina urgently convened a meeting of agriculture ministers and other officials from Mercosur members Brazil, Paraguay, and Uruguay and associate members Chile and Bolivia. Brazil, Argentina, and Paraguay.

While the governments recognized Monsanto’s right to royalties on the genetically modified seeds, they categorically rejected its intention to collect them from soybean shipments at destination points. “The officials stated they will not accept the payment of royalties on the beans, since this notion is not in line with regional countries’ legislation and rights,” the statement said. “Also, they agreed to coordinate their actions to defend the region’s producers from any monopolistic practices that may affect their income,” the Agriculture Department said. It added the issue would be high on the agenda of a meeting of the Biotechnology Group of Mercosur’s Southern Agricultural Council to be held April 12-13 in Buenos Aires.

Decrease In Brazil’s Soy Exports Expected In 2005

Brazil’s soy product exports are expected to earn $8.2 billion in 2005, down 18.3% from the $10.04 billion generated in 2004, according to the Brazilian Oilseeds Association (Abiove). The association’s estimate was revised down by $500 million since March 10, mainly due to the crop damage caused by drought in southern Brazil. Abiove also has lowered its production estimate for the 2004-05 to 51.7 million tonnes. The latest forecast is only slightly up on the 50.1 million tonnes harvested in 2003-04. USDA’s current production estimate is 55.9 million tonnes, with expected average overall yields of 2.5 tonnes/hectare.

Brazil’s drought is limited to isolated areas; with the exception of Rio Grande do Sul and Parana, where irreversible damage appears to be widespread throughout the state. These states each contain approximately one-sixth of Brazilian soybean area. The drought’s most damaging effects took place in February, with its combination of dryness and higher than average temperatures right at the time of flowering. A lack of soil moisture during this time period also took a toll on the states of Mato Grosso do Sul, Goias, and Sao Paulo, although to a much lesser degree.

Soybeans exports are now expected to earn $4.4 billion, down 18.4% on last year, according to Abiove. The figure is based on an average price of $220/tonne (21.4% lower than last year) and exports of 20 million tonnes (3.9% more than 2003-04). Soymeal exports are forecast at $2.6 billion, down 20.4% from the 2004 level. Abiove based the forecast on an average price of $190/tonne and exports of 13.7 million tonnes (5.4% less than 2004). Soyoil export revenue in 2005 is forecast by Abiove to be $1.2 billion, down 13.2% on 2004 based on an average price of $480/tonne and exports of 2.53 million tonnes (0.7% lower than in 2004).

EU Announces Ambitious Biofuel Targets

The EU has undertaken an ambitious plan to increase the percentage of biofuels used to power motor vehicles from about 1 percent in 2005 to 5.75% by 2010. In Europe, biodiesel accounts for about 80% of the biofuels used for transportation. Unlike the United States where biodiesel is produced from soybeans, EU producers use mainly rapeseed and, to a lesser extent, sunflower seed. According to the American Soybean Association, the boost in EU biofuels production will create both extra meals and substitutes as by-products, and these extra cheap by-products will to some extent compete with soybean meal. However, says ASA, the main limiting factor of the by-products is their lower protein content.

China Crushers Operating Well Below Capacity

China’s Cofco International Ltd., the country’s biggest soybean crusher, said last week it may see a 15% decline in second-half profit, as rising soybean prices cut margins in its oilseed crushing business. According to analysts at Rabobank, Cofco’s situation reflects the country’s entire soybean crushing industry. The once lucrative profit margins have now been eroded by new crushing plants built in the past years, and the average utilization rate for crushing capacity is now as low as 40-50%, Rabobank said.

Soy Complex Mostly Higher On Technical Buying And Potential Export Sales

The soy complex closed mostly higher on April 7 reflecting follow-through technical buying. The market was also buoyed by the announcement of a sale of 120,000 tonnes of U.S. soybeans to an unknown destination. In addition, there is talk of interest from China in U.S. soybeans from the Pacific Northwest and rumors that a cargo had already been purchased. However, there was a lack of follow-through buying after an early rally and some long liquidation from speculators pressured the market off its highs late in trading. May bean futures closed up $0.09 finishing at $229.09; July was $0.55 higher, closing at $232.13 and August gained $0.37 ending at $231.30. May meal was up $1.87, closing at $209.33; July was $1.98 higher, finishing at $209.33 and August increased $1.76 to finish at $209.99. May oil closed $3.97 lower to finish at $500.00; July decreased $3.09, closing at $505.51; and August lost $2.20, ending at $505.07.