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28. June 2004
****NOTE: There will be no ASA Weekly published next week in honor of the July 4th holiday****
ASA Clears Up USDA Inaccuracy On Its Soybean Rust Position American Soybean Association President Ron Heck said last week that USDA, in a recent letter to him, inaccurately stated that ASA has requested the U.S. ban soybean imports from soybean rust (SBR)-affected countries. Heck said: "ASA has never requested that USDA ‘ban soybean grain from SBR-affected countries.’ We do not want to import Asian rust, but we recognize to support our livestock industry, in order to maintain demand for our 2004 crop, that it will be necessary to import soybean meal. Until the science is completed on the survivability of spores in soybean grain, we do not believe that imports should be contemplated. To date, potential soybean grain importers have agreed with this position, and there have not been any soybean grain imports. The ASA and USDA position on this has been in agreement for many months, and we continue to be in agreement, in spite of persistent rumors to the contrary." Crush Exceeds Expectations The Census crush report pegged the May crush at 3.2 million tonnes, slightly above trade expectations. The crush was up from the previous due mostly to May having one more day to crush than April. Seasonal down time in April and stronger crush margins in May also accounted for the difference, they said. Soybean oil stocks were 715,000 tonnes, in line with trade expectations, but below what the sector anticipated. Soybean meal stocks of 423,000 tonnes, on the other hand, were surprisingly large, exceeding trade and market expectations by around 13,600 tonnes. The last crush reports that have showed a decline in ongoing meal consumption appear to validate the notion that soybean meal was being stored earlier in the marketing year, which now is or already has been consumed. It looks like this may be another crush report that gives the struggling oil share a boost. Ocean Freight Spreads Narrow Considerably The ocean freight markets have been in near free fall the past month — down nearly 50 percent on the Gulf to Japan route that finished the week ending June 18 at $39.17 per tonne. The last time this rate was below $40 was early October 2003. A lot of vessel capacity has become available in the Atlantic, mainly the result of the slowdown in exports of soybeans and soybean products out of South America. To Europe, the Gulf rate finished June 18 at $24.32, down more than $3 from the previous week. Out of the PNW to Japan the rate on June 18 was $26.35, down $1.53 for that week. The PNW rate has fallen more slowly than the Gulf rate leading to a spread that has narrowed more than $4 to $14.36 per tonne. The last time the spread was this narrow was during mid-January of this year. Given the considerable weakness in the basis spread between the PNW and the Gulf, where the PNW has been severely cut, the competitive advantage between the two port ranges for grain exports to Asia has shifted back to the Center Gulf, which has a $1.58 landed cost advantage into Japan. China Ends Ban On Brazilian Soy; AQSIQ Lays Out Import Procedures China has agreed to lift a ban on imports of Brazilian soy from 23 trading houses, after being reassured by tough new phytosanitary rules, Brazil’s Agriculture Minister Roberto Rodrigues said June 22. Speaking from Brasilia, Rodrigues said he had received a call from Farming Secretary Maçao Tadao, who is heading a Brazilian mission to China. Under the deal reached today, Beijing has agreed to accept shipments with up to one fungicide-tainted seed per kilogram of soy. This was confirmed by a statement from Rui Feltin, spokesman for Rio Grande do Sul state Governor Germano Rigotto, who took part in the talks. "From this moment, the 23 Brazilian businesses which have had cargoes rejected are free to resume exporting to China," he said. China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) said it is now streamlining applications for quarantine inspection of all plant and animal imports, according to a statement. All importers will have to apply for a quarantine inspection permit before signing any trade contract. The permit for quarantine inspection will be effective for the six months following issuance. Soybean importers, in particular, must provide the names of foreign suppliers and exporters in the applications for quarantine inspection permits. When signing the contract, the quarantine rules of related goods stipulated on permits will have to be included in the subsequent contract. All imports must comply with Chinese laws and food safety requirements, the statement said. Port inspection agencies will only examine cargoes after receiving the permit for quarantine inspection. Importers of any genetically modified products will have to present original copies of the Agricultural Genetically Modified Organisms Import Safety Permit and the Agricultural Genetically Modified Organisms Identification Approval Document. Brazil’s Institute of Geography and Statistics Cuts Production Estimate Brazil’s Institute of Geography and Statistics (IBGE) issued a report June 24 estimating Brazil’s 2004 soybean crop at 49.5 million tonnes, about 500,000 below its previous forecast, issued in late May. This figure is about 700,000 tonnes below CONAB’s (a division of Brazil’s Ministry of Agriculture) latest estimate and would be 800,000 tonnes below the latest estimate issued by Brazil’s Association of Oilseed Processors. Soy Complex Higher On Export Sales And Stocks The soy complex closed mostly higher on June 24 reflecting stronger-than-expected soybean export sales and firm cash markets. The oil market did not change much despite the decline in soybean oil stocks and larger-than-expected soybean meal stocks. July bean futures closed up $1.47, finishing at $338.59; August was $1.65 higher, closing at $311.58 and September gained $1.10, ending at $272.08. July meal was up $1.54, closing at $337.30; August was $2.65 higher, finishing at $319.67 and September increased $3.53 ending at $286.82. July oil closed $4.19 higher to finish at $648.15; August was up $7.94, closing at $628.75; and September gained $7.94, ending at $605.60.
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