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19. July 2004 Tight Supply Situation To Continue Soybean production in 2004-05 is projected at 80 million tonnes, according to USDA’s latest Supply and Demand report. USDA lowered its yield estimate slightly, reflecting state planted area estimates. U.S. 2004-05 soybean ending stocks are 5.72 million tonnes as reduced supplies are only partially offset by lower use. Soybean exports for 2004-05 are projected by USDA to be 28.6 million tonnes, reflecting reduced Canadian import demand and increased competition from South America as reduced imports by China for 2003-04 result in higher 2004-05 beginning stocks in South America. USDA projects soybean ending stocks for 2003-04 at 2.86 million tonnes, the lowest since 1976-77. U.S. soybean crush is projected slightly lower due to reduced soybean meal exports leading to decreased oil production and stocks. U.S. soybean crush for 2003-04 is forecast at 40.8 million tonnes, USDA said. The increase reflects higher-than-expected domestic soybean meal use through the end of the third quarter as returns to livestock production remain favorable. U.S. oilseed production for 2004-05 is projected at 89.4 million tonnes, reflecting lower soybean production. U.S. oilseed ending stocks for 2004-05 are projected at 6.7 million tonnes. Global oilseed production for 2004-05 could reach a record 379.1 million tonnes, USDA said. NOPA Reports Decline In Crush NOPA reported a June crush of just over 2.79 million tonnes of soybeans. That’s down from both the previous month’s total of 2.99 million tonnes and year-ago total of 3.41 million tonnes, but above trade guesses that were near 2.71 million tonnes. Oil stocks at NOPA facilities totaled 519,000 tonnes, down from 541,000 tonnes in May, but near the top end of guesses. Meal exports totaled just 73,833 tonnes, down from 117,075 tonnes in May and well below year-ago totals of 205,167 tonnes. Bill Would Make USDA Collection Agency for Bio Crops Legislation introduced by Rep. Marcy Kaptur (D-Ohio) would allow farmers to retain harvested patented seeds and plant them the following year, but would require a payment to USDA for the privilege. Currently, farmers who plant patented genetically engineered seeds are not permitted under their agreements with the patent holder to save seed from one season for planting in the next. Instead, farmers who wish to plant GM seeds year after year must purchase new seed annually and pay a so-called "technology fee" to the patent holder. Kaptur’s bill would require farmers who want to save seed to report the amount to be replanted and to pay to USDA a fee established not by the patent holder but by the department. Money in the "patented seed fund" then would be disbursed to patent holders. The measure does not specify how USDA would verify the information provided by farmers. The proposal does limit replanting of saved GM seed to the person who planted the original GM crop, thus ruling out the option of a farmer selling saved patented seed to other farmers. The bill also would require the Treasury Department to collect tariffs on imports of GM crops from countries where farmers are charged either no technology fees or fees that are lower than those charged to U.S. farmers. Unstated but implied in the bill would be a requirement that imports of all commodities that could be genetically engineered be certified and/or tested to verify their nature so Treasury officials could determine whether application of a tariff would be appropriate. Proposed Bill Would Improve River Transportation Rep. Kenny Hulshof (R-Mo.) has introduced legislation in the House that is the companion bill to S. 2470, a Senate bill calling for the construction of new navigation locks on the upper Mississippi and Illinois rivers. Like the Senate bill, the House version recommends the construction of seven new 1,200-foot locks and the immediate construction of small-scale measures. Additionally, the bill calls for ecosystem restoration measures in the upper Mississippi River basin. When the Senate bill was introduced, sponsors said it would authorize $2.3 billion for seven new locks and $1.46 billion for ecosystem restoration. An additional $850 million would be paid from the Inland Waterway Trust Fund, which is funded by private users. Half of the cost of the locks would come from the trust fund, which collects barge fuel tax. The primary Senate sponsor is Sen. Kit Bond, also a Missouri Republican. His proposal was approved recently by the Senate Environment and Public Works Committee. "The importance of our nation’s waterways to agriculture cannot be overstated," said Hulshof in a statement. "If new 1200-ft. locks are not built by 2020, farmers stand to lose up to $364 million annually," he claimed. He also stressed that river transportation is an efficient, environmentally friendly mode of transportation, noting that a single 15-barge tow "takes 870 large semi-trucks off our roads and highways, and it significantly reduces harmful emissions." Earlier this year, Hulshof helped launch the Congressional Waterways Caucus to help provide a clearinghouse for information within Congress on the issues facing the nation’s waterways, specifically as they relate to navigation and the transportation of commodities. Soy Complex Mostly Lower On Favorable Weather And Declining Basis Levels The soy complex closed mostly lower on July 14 taking back most of the previous day’s gain in the new-crop contracts. Sharply declining interior basis levels weighed heavily on the August contract, while the expectation for favorable weather weighed on the new-crop contracts. The oil market was buoyed by rumors of large South American soybean oil business and because of the recent decline in U.S. meal basis levels. Given imports of soybean oil from South America and an increase in other edible oil supplies, there appears to be enough edible oil to offset the shortage of domestically produced soybean oil caused from the lack of soybeans available to crush in July and August. On the other hand, the prospective cut in the crush during July and August is expected to limit soybean meal production, and even with the arrival of imports it looks like domestic soybean meal usage will need to fall sharply from last year’s level during July and August because of limited supplies. August bean futures closed down $10.93, finishing at $275.94; September was $7.16 lower, closing at $243.24 and November lost $8.36 ending at $237.18. August meal was down $16.20, closing at $280.31; September was $12.68 lower, finishing at $250.77 and October decreased $10.03 ending at $226.08. August oil closed unchanged to finish at $582.68; September was down $3.09, closing at $562.83; and October lost $1.76, ending at $537.26.
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