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17. May 2004 Record U.S. Soybean Production Possible For 2004-05 U.S. oilseed production for 2004-05 could be 90.2 million tonnes, up 19 percent from 2003-04, according to USDA’s latest S&D report. Soybean production will account for most of the gain, rising 23 percent to a record 80.7 million tonnes, USDA says. Other U.S. oilseed production is expected to decline by 0.3 million tonnes due to smaller peanut, sunflowerseed, and canola crops. Soybean supplies are projected to reach a record 84 million tonnes despite the lowest beginning stocks since 1977. USDA projects ending stocks for 2004-05 at 5.17 million tonnes, up 2.04 million tonnes from 2003-04, as supply growth outpaces increases in crush and exports. The larger crop would let soybean crush rebound sharply from 2003-04, driven by higher domestic soybean meal use and increased meal exports. Soybean exports are projected to increase to 29.4 million tonnes for 2004-05. USDA also reports that large U.S. soybean supplies combined with reduced South American supplies and exports this fall are expected to boost U.S. soybean exports to a record level in the new marketing year. Global oilseed production for 2004-05 is projected by USDA to be a record 378 million tonnes, up 42.2 million tonnes from 2003-04. Most of the gain will be from soybeans, with crops in the United States and South America likely to recover from weather, disease, and insect problems experienced in 2003-04. Global oilseed output for 2003-04 is projected at 335.8 million tonnes. Brazil’s soybean crop is forecast to be 53.5 million tonnes, as dry weather impacts and Asian rust fungus impact yields. USDA estimates Argentina’s soybean production could be 34 million tonnes, below last year’s record crop. U.S. Grain Carloadings Increase But So Does Terminal Dwell Times Total cars on-line among U.S. Class I railroads have been steadily increasing the last few weeks, resulting in a higher level of grain carloadings. However, the increase in activity does come at a price. Grain train speeds are near two-year lows and average terminal dwell times are the highest in three years. Although, U.S. level grain train speeds and average terminal dwell times are being influenced by the performance of Union Pacific Railroad and to a certain degree the CSX Transportation railroad. The Union Pacific has struggled to maintain adequate service across the west and most recently turned down business in order to avoid further system interruptions. Meanwhile, truck drivers on the West Coast have been protesting high fuel prices by blocking access to intermodal yards. Railroads are determined to keep systems moving, but are running into problems with increased terminal dwell times. And, Union Pacific and Burlington Northern and Santa Fe Railway are adding locomotives and crews to anticipate summertime pressure on the system. April Crush Down From March Level The National Oilseed Processors Association (NOPA) said soybean crush in April totaled 2.87 million tonnes, down sharply from the March crush of 3.3 million tonnes. NOPA soyoil stocks of 551,000 tonnes for the month of April also were below industry estimates. In March, oil stocks totaled 631,000 tonnes, NOPA said. Unlike the low crush figure, analysts believe the lower oil stocks figure could be a positive for the soyoil market. China Bans Four Suppliers From Shipping Brazilian Soybeans China’s quarantine authority has temporarily banned four foreign suppliers from exporting Brazilian soybeans to China. China’s State Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) announced the ban to its branches nationwide on May 10 alleging that cargoes of soybeans were mixed with seeds treated with fungicide. There is no timetable for removing the ban. Noble Grain Pte Limited, Cargill Agricola S/A, Irmaos Trevisan S/A-Ind Com, E Agricultura, and Bianchini S/A Industria Comercio E Agricultura are the four trading houses that were blacklisted. According to AQSIQ, in late April, the quarantine bureau in Xiamen, Fujian province, discovered that a cargo of 59,000 tonnes of Brazilian soybeans that was tainted with a seed coating agent, which contained fungicide and pesticide. The seed-coating agent is used to prevent against fungus during the early growing period, but the product could cause harm to consumers, AQSIQ believes. According to Girabis Evangelista Ramos, director of the Brazil Agriculture Ministry’s crop health inspection department, China has every right to punish firms should they find them to be sending unsafe produce. Ramos said the Brazilian government would not intervene on behalf of the exporter should the ban be confirmed, adding that the Agriculture Ministry had done its part by increasing inspections of grain exports at port. "This is an issue that has to be resolved between the exporting companies and Chinese authorities," he said. Argentine Exports Below Normal; Tax Regulations For Exporters Still Unclear Soybean exports from Argentina during the first eleven months of 2003-04 (April 2003-February 2004) totaled 8.7 million tonnes, according to the National Census and Statistic Institute. This year, approximately 70% of soybean exports went to China, up from 45% during the previous year. Other major markets include Thailand, Turkey, and Egypt. The export pace during 2003-04 was down, compared to previous years. With only one month of official data needed to complete the marketing year, exports are likely to be less than 9 million tonnes. Meanwhile, this year’s changes to income tax regulations require that grain and oilseed exporters pay income tax on the price of the commodity at the time a sales contract is written or on the date of export, whichever yields the greater tax. While the law was put into place late last year, the Argentine government has not clarified the implementation process, leaving many exporters unsure as to how the government will calculate their taxes at the end of the year.
Soy Complex Higher On Technical Adjustments The soy complex closed lower on May 13 reflecting a technical recovery from sharp losses on May 12. Export sales were disappointing with net soybean sales negative because some sales to Japan were switched to the 2004-05 marketing year. May bean futures closed up $7.90, finishing at $372.21; July was $3.77 higher, closing at $361.00 and August gained $4.87, ending at $357.70. May meal was up $11.57, closing at $357.70; July was $7.72 higher, finishing at $348.33; and August increased $4.85 ending at $328.71. May oil closed $2.20 higher to finish at $697.76; July was unchanged, closing at $686.29; and August gained $0.22, ending at $669.32.
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