ASA Applauds Legislation To Extend Biodiesel Tax Incentive

The American Soybean Association applauded the introduction of legislation in both the House and Senate that would extend the biodiesel tax incentive to 2010. Unless Congress passes an extension, the current biodiesel tax incentive, which took effect on January 1, 2005, will expire on December 31, 2006. "Biodiesel is an essential component of a comprehensive national energy policy that will help the United States reduce its dependence on imported oil," said ASA President Neal Bredehoeft. "Every gallon of biodiesel processed from domestically grown soybeans also helps thousands of farmers and their families and the rural communities in which they live."

The credit, which amounts to a penny per percentage of biodiesel blended with conventional diesel, was included in the JOBS Act of 2004 at the insistence of Senator Chuck Grassley (R- Iowa). As it expires at the end of 2006, its extension is the top legislative priority of the ASA. Representatives Kenny Hulshof (R-Mo.) and Earl Pomeroy (D-N.D.) introduced legislation doing that in the House. Senators Blanche Lincoln (D-Ark.) and Jim Talent (R-Mo.) introduced an identical extension of the biodiesel tax incentive in the Senate.

The biodiesel tax incentive is structured as a federal excise tax credit. It will lower the cost of biodiesel to consumers in taxable and tax exempt markets. Based on baseline estimates from USDA for future soybean production, over a five-year time period the biodiesel tax provisions could add almost $1 billion directly to the bottom line of US farm income, ASA noted In addition, the provisions will significantly benefit the US economy and could increase U.S. gross output by almost $7 billion.

"ASA's goal is to have this extension legislation in circulation with the intent that it will be included in a final energy bill," Bredehoeft said. "We are confident that our champions in Congress will help us achieve this vitally important goal."

Indian Edible Oil Imports Up 21%

Indian edible oil imports increased by 21% during the six months ending April 2005 following a drop in domestic supply, the Solvent Extractors' Association of India (SEAI) said last week. Imports jumped to 2.2 million tonnes in the first half of the 2004-05 year, which ends in October, from 1.82 million tonnes in the same period last year, the SEAI said on a statement.

"Imports are expected to be much higher this year because of a drop in domestic oilseeds production, said B.V. Mehta, executive director of SEIA, adding that India was likely to import about 500,000 tonnes per month this year. Purchases of edible oil by India are expected to reach around 5 million tonnes this year from 4.4 million tonnes in 2003-04, Mehta said.

Imports of crude soyoil jumped to 735,352 tonnes in the November 2004-April 2005 period from 236,990 tonnes a year earlier, while crude palm oil purchases rose 10.8% to 1.01 million tonnes from 911,520 tonnes, SEAI said. Meanwhile, India's oilseed output in the current year is estimated at 21.8 million tonnes, down 6.4% from 23.3 million tonnes last year, according to SEIA.

Low Prices And Expensive Inputs Could Limit 2005-06 Brazilian Plantings

Brazilian planted area of soy will fall in 2005-06 (September-August), as will investment in inputs such as seeds and fertilizers, due to low prices and heavy crop losses this year, said Carlo Lovatelli, president of the Brazilian Agribusiness Association, according to published reports out of Brazil. Prices have been depressed by the strength of the Brazilian real, which has gained 20% against the dollar in the last six months, while many farmers in the South have lost large amounts of money because of a heavy drought last summer.

Brazil is now expected to produce 51 million tonnes this season when initially output was pegged above 60 million tonnes. Moreover, much of the soy produced in the South will be of low quality, said Lovatelli. The extent of the drop in planted area and investment is not yet clear, he said. "Only after the harvest will we have an idea (how much investment in crop technology will drop), as farmers will see if they have any funds," he said.

Record Argentine Harvest Expected

Argentine farmers will harvest a record 38 million tonnes of soybeans in 2004-05, the Agriculture Secretariat said last week. That's up 20.6% from 31.5 million a year ago, according to the Secretariat. The estimate for planted area also was boosted to 14.4 million hectares, down slightly from the 14.5 million hectares planted a year ago. Area is down this year because soybean prices were lower than they were a year ago, according to the Secretariat.

The Buenos Aires Exchange has put soybean output at 38.4 million tonnes in 2004-05. USDA forecast 2004-05 soybean production at 39 million tonnes with area at 14.2 million hectares.

China Expects A Steady Rise In Soybean Demand During 2005

China’s Ministry of Agriculture ministry said it expects a steady rise in soybean demand in 2005. However, if monthly soybean imports remain at March levels, there will be an oversupply in 2004-05, the ministry said. Unfortunately, the ministry didn't provide specific figures or provide a methodology on which its projections are based. China's 2005 soybean acreage is expected to be "stable or slightly lower" from 2004, the ministry said. For the 2004-05 marketing year, which ends in August, the ministry expects an increase in soybean supply, with domestic production estimated 17% higher from a year earlier.

For soyoil and soymeal, the ministry said ending stocks and stock-consumption ratios will remain at the relatively high levels seen in recent years because of excess supply, unchanged from its forecast in March.

Soy Complex Lower Despite Bullish S&D Report

The soy complex closed lower on May 19. July bean futures closed down $1.47 finishing at $231.21; August was $1.19 lower, closing at $231.21 and September lost $1.47 ending at $230.11. July meal was down $1.10, closing at $215.72; August was $0.88 lower, finishing at $213.72 and September decreased $1.21 to finish at $215.17. July oil closed $4.85 lower to finish at $485.89; August decreased $2.20, closing at $487.86; and September lost $4.63, ending at $489.42.