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12. July 2004 Record Soybean Plantings; June Stocks Lowest Since 1977 The 2004 soybean planted area is estimated at 30.3 million hectares, up 2% from last year, according to USDA’s Planted Acreage report. If realized, this will be the largest planted area on record and a rebound from the three-year decline in plantings. Area for harvest could reach 29.8 million hectares, up 2% from 2003. Area planted could increase or remain unchanged from last year in all States except Illinois, Iowa, Minnesota, South Dakota, and Wisconsin, USDA said. Farmers reported to USDA that 87% of the intended soybean acreage had been planted at the time of the survey interview, compared to an average of 78% for the past 10 years. Soybeans stored in all positions on June 1, 2004 totaled 11.2 million tonnes, down 32% from June 1, 2003, USDA said. This is the lowest June 1 stocks level since 1977. On-farm stocks totaled 2.99 million tonnes, down 60% from a year ago. Off-farm stocks, at 8.16 million tonnes, are down 9% from the previous year. According to USDA, disappearance over the March-April-May period is 13.5 million tonnes, down 17% from the same period a year earlier. USDA: No Decision On Soybean Rust Import Regulations USDA will review a report on Asian Soybean Rust spore survivability and any other available information before deciding whether to strengthen soybean and meal import rules. USDA said in a statement that the department will take the spore survivability research and any other input they have at the time into consideration in making any decision regarding additional safeguards. The spore research isn't expected to be finalized until this fall at the earliest. The American Soybean Association also has urged USDA to not allow imports of whole soybeans from rust-infected countries, such as Brazil and Argentina, until more scientific studies can be conducted on the risk of soybean rust. Freight Rates Rise Again As Chinese Demand Increases Over the past two weeks the ocean freight market reversed its sinking trend with time charter rates up sharply. The change in the freight market comes as China has averted a hard landing with its economy by effectively implementing controls to cool its economy. Now the economy in China is once again steaming ahead and industries such as steel manufacturing are charging forward. The demand for dry bulk commodities is taking up the surplus vessel capacity on the world’s oceans. Last year, the sharp increase in rates took full effect in late September and early October, then peaked about 4 months later. The fundamentals are still in place on the bulk vessel side where very little capacity has been added this year with not much expected to come on-line over the coming months. If demand for capacity continues higher, surging rates could follow. International Ag Coalition Asks Leaders To Pressure China Over Imports Soybean exporters from Brazil, the U.S. and Argentina are pressing their respective governments to urge China to stop arbitrarily restricting imports. Six agriculture groups sent joint letters to President George Bush, Argentine President Nestor Kirchner and Brazilian President Luiz Inacio Lula da Silva asking them to force China into changing its policy of restricting trade by canceling contracts, banning individual companies and imposing arbitrary and onerous trade rules, thus breaking World Trade Organization agreements. Both U.S. and Argentine exporters have previously been affected by China’s lack of transparency, routine delays and cancellations of import permits. The letter specifically urged that governments to push China to rescind new sanitary import rules, introduced July 1, which are much more stringent than international standards. It went to ask that the government obtain assurances that China will cease to use administrative restrictions to limit trade. If it should continue to do so, the government should consider lodging a complaint at the World Trade Organization, it added. The letter was sent by Brazil’s National Cereal Exporters Association and the Brazilian Vegetable Oil Processors Association, by Argentina’s Oil Industry Chamber and the Cereal Exporters Center, and the North American Export Grain Association and the National Oilseed Processors Association. Brazilian Court Rules Sale Of Roundup Beans Illegal A Brazilian federal court upheld a ban on the planting and sale of Monsanto’s genetically modified Roundup Ready soybeans. The court also restored the power of the National Biosecurty Technical Committee (CNTBio) to rule on GMO cases. Judge Antonio Ezequiel Silva made the casting vote of three on the GMO case, ruling to uphold a 1999 decision that Monsanto’s Roundup Ready soybeans could not be used until an environmental impact study is conducted. However, he added that it was up to CTNBio to rule on the impact of GMO types. The decision impact will be significantly lessened because a biosecurity bill currently awaiting a vote in the Senate. A special government decree allowed use of GMOs in the 2003-04 season but they will likely become illegal next year, should the biosecurity bill be passed. Soy Complex Mostly Lower On Weather And Import Rumors The soy complex closed mostly lower on July 8 reflecting a weather forecast for rain and normal to above normal temperatures. Meal futures closed lower amid rumors of soybean meal imports apart from those entering Wilmington, NC, and the ability of crushers to extend to sell soybean meal. This week, USDA likely will reduce its 2004 soybean production forecast by about 544,000 tonnes because of lower acreage. This would reduce USDA’s 2004-05 carryout to 5.44 million tonnes if no changes are made in usage, but USDA’s 2004-05 demand forecasts look rather generous. USDA’s 2003-04 balance likely will reflect lower and possibly negative residual use for the marketing year, which would allow the crush to be increased. USDA also might boost 2003-04 exports, but may wait for another month of export data. Favorable weather forecasts and questionable demand prospects are expected to continue to weigh on new-crop futures whereas old crop futures have the potential to be volatile as the market contends with tight old-crop supplies and July futures near expiration. July bean futures closed up $4.04, finishing at $357.33; August was $3.12 lower, closing at $298.72 and September lost $0.64, ending at $251.23. July meal was down $12.13, closing at $362.44; August was $6.28 lower, finishing at $317.79 and September decreased $0.77 ending at $275.91. July oil closed $18.74 lower to finish at $622.80; August was down $18.96, closing at $601.41; and September lost $15.21, ending at $577.38.
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