USDA: 2005-06 Soybean Production 78.8 Million Tonnes

U.S. oilseed production for 2005-06 is projected at 89.2 million tonnes, down 8 percent from 2004-05, according to USDA. Soybean production will account for most of the reduction, falling 8 percent from last season’s record crop to 78.8 million tonnes. Soybean supplies are projected to reach 88.5 million tonnes, basically flat from the 2004-05 level. USDA expects crush and exports to expand modestly leaving ending stocks for 2005-06 at 7.89 million tonnes. Higher soybean crush reflects moderate increases in domestic soybean meal demand and exports. Soybean exports could reach 30.6 million tonnes for 2005-06 as large U.S. soybean supplies combined with lower than expected Brazilian stocks this fall are projected to boost U.S. soybean exports to record levels, USDA said.

Global oilseed production for 2005-06 is projected at 378 million tonnes, down 2.3 million tonnes from 2004-05. If realized, USDA said this would be the first year-to-year decline in global oilseed production since 1995-96. Lower production in the U.S. will more than offset a 5 million tonne increase in foreign production. 2004-05 world oilseed output is projected at 380.3 million tonnes. USDA estimates Brazil’s soybean crop at 53 million tonnes, reflecting the impact of dry weather on yields in the southern growing region.

USDA Provides $1.2 Million For Asian Rust Surveillance

USDA plans to use nearly $1.2 million in contingency funding to help monitor, report and manage soybean rust during the 2005-growing season. The department’s Animal & Plant Health Inspection Service will apply the funding to soybean rust surveillance and monitoring; predictive modeling; Web-based dissemination of information to stakeholders; finalizing fungicide criteria; and communication and outreach.

Brazilian Soybean Harvest Estimate Cut

Energy Crisis Hurts Argentine Soyoil Sector

Argentina’s vegetable oil industry has been hit by fuel shortages this year and warned that production costs could soar by 200% this winter due to an energy crisis. Argentina is bracing itself for a second winter of natural gas shortages – a consequence of underinvestment in the energy sector in past years due partly to a government freeze on tariffs. The Argentine Chamber of Vegetable Oil Industries (CIARA) said in a statement that some crushers had already suffered cuts in natural gas supply in the autumn. “The situation leads us to predict that this winter will be accompanied by a significant shortage of a gas supply to industries, which in our sector implies an increase of 200% in direct costs,” CIARA said in a statement.

Argentina’s soy crushers are heavy users of natural gas and many have converted to more expensive alternative fuels after suffering supply difficulties last year. Companies fear they will be unable to secure the fuel needed for new plants and plant expansions, CIARA said. The higher prices may prompt buyers of Argentine vegetable oils, including China, to prefer buying grains that they can process themselves rather than the finished product, the chamber said. Argentine oilseed-processing plants have a crushing capacity of 32.5 million tonnes a year. Soyoil exports fell 6.7% in 2004 to 2.3 million tonnes compared with the previous year.

China FMD Rumors Affect Soybean Shipments

Rumors of an outbreak of the highly contagious foot-and-mouth disease (FMD) have hit China just as large quantities of oilseeds are arriving from South America. Traders last week said talk that that disease had spread in several provinces had banished hopes amongst crushers that domestic soymeal prices might recover to restore profit margins following the weeklong Chinese Labor Day holidays. Traders have spread rumors that foot-and-mouth disease has been found not only in the north, but also in the east. Chinese traders also said the talk of the disease had curtailed soymeal purchasing by livestock feed mills.

An official from the Chinese agriculture ministry said the government was investigating the rumors. China has never previously announced any outbreak of FMD, however a government spokesman said there was an outbreak almost every year and the government was currently working on a reporting system. Currently, The World Organization for Animal Health (OIE) lists China as a country free from FMD with vaccination.

Indian Oilmeal Exports Drop 54%

Indian oilmeal exports fell 54% in April compared to the same month last year, mainly due to lower sales of soymeal, the Solvent Extractors’ Association of India (SEAI) said. The SEAI said that exports of oilmeal last month were estimated at 220,900 tonnes, compared with 477,425 tonnes in April 2004. It said in a statement that the reduction was mainly due to a slump in soymeal exports to 99,250 tonnes, compared to 366,625 tonnes last year.

India’s exports fell because domestic soybean prices were high and crushers got a good price for soymeal in the local market, SEAI said. Rapeseed exports also fell in April, totaling 90,900 tonnes compared to 96,000 tonnes a year ago. Of this, 56,700 tonnes were exported to China and 31,100 tonnes to Korea, SEAI said.

Soy Complex Lower Despite Bullish S&D Report

The soy complex closed lower on May 12 despite a bullish supply and demand report. Soybean complex futures recently have been trading well above their fundamental value. There is an unusually large risk premium reflected in futures because of tight farmer holding of stocks, speculative buying and concerns about rust. If any of these influences diminishes, the risk premium will erode. Farmer selling could pick up as soybean planting is completed, but the farmer may be inclined to hang onto the crop longer than normal because of the uncertain threat that rust poses to the crop this year and its potential to rally prices. May bean futures closed down $3.03 finishing at $227.72; July was $3.49 lower, closing at $229.09 and August lost $3.58 ending at $229.00. May meal was down $1.32, closing at $215.39; July was $2.87 lower, finishing at $211.64 and August decreased $2.87 to finish at $211.31. May oil closed $6.17 lower to finish at $498.90; July decreased $6.39, closing at $501.99; and August lost $7.28, ending at $503.31.