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22. March 2004 USDA Concerned About Low Stocks USDA continues to be concerned about the unusually low soybean stocks level this year as well as the industry’s pace of adjustment to tight markets. Last week, Keith Collins, USDA’s chief economist said the estimate for 2003-04 soybean ending stocks is "something we’ve been struggling with." While Collins said it is possible that the United States could go below USDA’s 3.4 million tonne carryover estimate, "for right now, based on historical relationships of what the market needs to carry out for working stocks, we are using 125 million bushels [3.4 million tonnes]." To achieve the adjustments needed, Collins said it will require "our export pace to slow down and our domestic crushing pace to slow down because we’ve been running at very high levels at both" and "we would run out of soybeans." However, Collins said he expects orderly adjustments and that exports now are lower than the previous year. "And we expect soybean crush to slow down as well, particularly as the South American harvest is completed and those soybeans start to get into the world market," said Collins. GIPSA To Provide Better Inspection Information If Congress agrees to an increase in funding, USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) will be able to provide grain elevators with better access to grain inspection information via the internet, a GIPSA official told the annual National Grain and Feed Association convention last week. With more adequate funding, GIPSA will be able to develop a "web-based information enterprise architecture" that will put detailed inspections information on the internet, giving the industry better access to the information and making the department more efficient, said David Shipman, Deputy Administrator for GIPSA. GMO Issues And Sanitation Inspector Strike Create Major Problems At Paranagua Port Authorities at Paranagua, Brazil’s main grain port, accused soy exporters of clogging up the port in an attempt to break its policy of banning genetically modified soybeans. According to Eduardo Requiao, superintendent of the Paranagua port authority, it would take control of scheduling ship loading and truck arrivals, if exporters don’t start using the port to full capacity. Requiao spoke one day after exporters sent a letter to Agriculture Minister Roberto Rodrigues requesting intervention at the port. Exporters say testing for GMOs, uncertainty over rules and a ban on shiploading overtime causes the delays at port. Soy export officials rejected the allegation that an embargo was being organized. "That’s an absurd idea. We have to pay $50,000 for every day a ship is late...Nobody can afford that kind of protest," said Sergio Mendes, president of the Brazilian Cereal Exporters Association (ANEC). According to Edson Cesar Aguiar, president of the Paranagua port operators union, low shiploading levels were due to operational problems, not a slowdown. Waiting times to load ships have jumped to 25 days even before the bulk of Brazil’s potentially record soybean crop has approved at port. Parana banned the export of GMO soybeans despite a federal decision to free the planting and the sale of GMOs this year. Soybean trucks are tested at port and rejected if tests prove positive. Around 300 trucks of beans have already been sent away from port for carrying traces of GMOs. Requiao demanded that port operators began loading soybean ships at full capacity, of 1,500 tonnes per hour and stop sending trucks to port before the ship has arrived in order to reduce the line of trucks, which totaled approximately 3,000 on March 17. Meanwhile, a strike by Agriculture Ministry sanitation inspectors continues to complicate soy export operations. Port authorities said the strike by farm sanitation inspectors at port since March 15 and rain over the weekend also have contributed to the recent shipping delays. A spokesperson for the farm sanitation inspectors said they would continue their strike action in support of pay demands until the Agriculture Ministry tabled an improved offer. Brazil Crop Outlook Down Brazil’s Agriculture Ministry expects to cut its estimate for the nation’s soybean crop because of bad weather conditions and the outbreak of the Asian rust fungus. In February, the government estimated the 2003-04 crop (October-September) at 57.7 million tonnes, higher than recent local estimates as low as 54.4 million tonnes. The Agriculture Ministry’s official estimate will not be released until April 23. However, according to Eledon Oliveira, manager of the National Commodity Supply Corporation’s crop survey department, soybeans have been lost because of heavy rains in the center-west of the country and drought in the south. "Certainly soybean production will be lower than estimated in February," said Oliveira. Meanwhile, Brazil’s National Agriculture and Ranching Confederation, a farmers’ group, on March 17 said that farmers had lost 6.1 million tonnes of soybeans because of weather and rust, and the crop would be no higher than 51.5 million tonnes. Soy Complex Higher On Exports And Shipping Delays In Brazil The soy complex closed lower March 18 reflecting good soybean export sales that included an additional 61,000 tonnes to China. Soybean and soybean meal futures reached new contract highs for the fourth consecutive day. Cumulative export sales have reached 95.2% of the USDA forecast for the season as compared with 85.6% on average for this time of the year. Meal hit new contract highs on much higher than expected export sales. Meal sales were 167,700 tonnes. Meanwhile, oil export sales were 2,100 tonnes and strength in palm oil also supported the market. Shipping delays in Brazil ahead of the heart of harvest added to the bullish tone as speculative buying remains active. Some Brazil truckers were protesting the long lines at Paranagua. Prices have rallied sharply this past week, which looks to be justified given the big cuts in usage that will be necessary during the last half of the 2003-04 marketing year because of the lack of domestic soybean supplies. May bean futures closed up $8.82, finishing at $374.05 July was $9.37 higher, closing at $370.74 and August gained $8.82, ending at $351.45. May meal was up $9.92, closing at $346.01; July was $10.03 higher, finishing at $343.37; and August increased $7.83 ending at $327.60. May oil closed $16.98 higher to finish at $753.09; July was up $17.64, closing at $752.21; and August gained $17.64, ending at $736.34.
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