Larger Than Expected May Crush

The monthly Census Crush Report showed soybeans crushed in May at 3.89 million tonnes, slightly higher than trade expectations and compared to 3.20 million tonnes during May of 2004. The previous week, NOPA reported May crush at 3.72 million tonnes. Oil stocks were pegged at 850,000 tonnes. The larger-than-expected crush appears to be driven by robust soybean meal exports.

Meanwhile, analysts expect soybean meal domestic use, which is estimated to have been 5.3% above the 5-year average from October through April, to be up 5.6% for the 2004-05 marketing year as a whole. The bigger soybean crush further undermines the soybean oil fundamentals because of larger soybean oil supplies that are projected to result in 2004-05 soybean oil ending stocks of 771,000 tonnes.

Many Factors Have Lead To Current Isolation Of Asian Rust

Asian soybean rust so far has been isolated in Florida and Georgia thus far in 2005, surprising many experts. In an interview with Dow Jones Newswire, Ohio State University plant pathologist Anne Dorrance, said: “One theory is that there was just very little inoculum (rust spores) that survived the winter, which for U.S. farmers is actually very good. Another reason is that the environment in Florida has not been favorable for rust development. And another fact is that the weather currents have not allowed spore movement.”

Also, drought in the central Corn Belt also may be hindering the spread of soybean rust, as well as the development of soybeans themselves. Experts point out that the same conditions that are most conducive to high soybean yields, such as plentiful moisture and warm temperatures, are the same environment needed to promote the rapid spread of Asian soybean rust.

Manitoba Processors Turn To U.S. Soybeans

Lower than expected soybean area in Manitoba has led to increased exports of U.S. soybeans to the province. Martin Harder, operator of the Jordan Mills soybean processor, located just south of Carman, Manitoba said that at present 75% of the soybeans being crushed at the facility are brought in from the U.S., mostly from the Grand Forks and Fargo, N.D., region. Harder says importing soybeans from the U.S. is costly, “But the cost of moving soybeans from the U.S. is a lot cheaper than, let’s say, bringing them in from Ontario.”

High Oil Prices Create Larger Market For Oilseed-Based Biofuels

The surging world price of crude oil is making biofuels increasingly competitive, an official from the International Energy Agency (IEA) said last week. Soaring oil prices have encouraged major consumers worldwide to sharply increase their use of ‘green’ biofuels made from agricultural products including oilseeds.

But in most parts of the world the additional costs for producing biofuels make the fuel uncompetitive without hefty tax rebates from governments. “Biofuels are getting more competitive due to the surge in oil prices but these would need to be somewhere between $60 and $100 a barrel for biofuels to be competitive without subsidies,” IEA biofuel specialist Lew Fulton said.

WHO Sees No Health Risk From Biotech Foods

A report by the World Health Organization concludes that genetically engineered foods currently on the market do not appear to pose any health threat to humans or to the environment. However, the report also points out that items currently being marketed were run through rigorous safety and risk assessments before being offered for sale. “That’s not the same as saying that [genetically engineered] foods in the future are automatically safe,” said Jorgen Schlundt, director of WHO’s Food Safety Department. “Safety assessments must continue...using risk assessment techniques and continually updating these techniques,” he added.

Brazil’s Farming Expansion To Slow

Expansion in Brazil’s farm sector is expected to slow in 2005-06 as weaker commodity prices and high production costs take a toll on farmers’ financial returns, according to a special report by USDA. Brazil’s 2005-06 total grain, oilseed and cotton area is expected to reach 44.7 million hectares, up only 2% from last year’s record level. Of this total, about 23 million hectares will be planted with soybeans, almost unchanged from last year. The changes reflect the contrasting fortunes of different crops in 2004-05, when many soybean, wheat and rice producers made losses, while profit margins for corn were positive.

USDA warns that producers may face another year of negative returns as a result of weak commodity prices, rising production costs and a strengthening domestic currency. “It is uncertain whether sufficient production financing form either public or private sector sources will be made available to sustain the current record area of grains, oilseeds and cotton - let alone support its continued growth from current levels,” the report notes.

Meanwhile, Brazilian farmers are in default on up to one-third of their debts with the government, while high fertilizer and herbicide prices mean producers will have to cut spending on crops next year, according to Dow Jones Newswires. The worst drought in 50 years in southern Brazil from October 2004 through March left many producers in a precarious financial situation. As a result, any drought next summer could have a much greater effect on the soybean crop than in previous years.

In related news, Brazil’s Census Bureau (IBGE) pegged its soybean production estimate for the 2004-05 at 51.08 million tonnes. The IBGE forecast compares to the 49.52 million tonnes harvested by Brazil last season.

Soy Complex Lower On Rain Forecast For Early July