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| The Soy Export Weekly Update
Sept. 15, 2008 |
USDA Supply/Use Report Recap USDA’s September survey-based look at U.S. row crop yields was released this morning, along with the USDA’s World Board update of global agricultural supply and demand forecasts. In an unmistakably bullish surprise, USDA’s estimates of soybean yields declined from August. Soybean stocks were projected to remain at a minimal 3.67 million tonnes. Early market reactions call for an immediate significant price rebound as traders flee short positions and buying interest leaps. USDA expects the U.S. soybean yield of 2.69 tonnes per hectare, down from 2.73 tonnes per hectare last month. The U.S. soybean production estimate slips to 79.9 million tonnes from 80.9 million tonnes last month, but tops the 70.4 million tonnes of 2007. Crush was cut slightly by USDA to accommodate the smaller supply. USDA based its lower yield forecasts on dry August weather and declining reported crop conditions, mirrored in its survey input. For soybeans, dry August weather, lower condition ratings, and reduced-pod counts were said to point to a lower eventual yield. Those lower corn and soybean yields will be in place through the month as the best authoritative view from a clearly objective source. Yields will be reviewed again in October as usual, with a clean sample drawn from a more mature crop. Actual harvest results will influence the survey population. USDA is still forecasting a rise in world grain stocks due to exceptionally good wheat production. Coarse grain stocks are expected to fall slightly to 147 million tonnes from 150.7 million tonnes based on the U.S. corn stocks decline. World soybean stocks are expected to rise to 51.2 million tonnes from 50.1 million tonnes. So, the world is better supplied with grains and oilseeds in USDA’s view. USDA boosted China’s soybean crop by 0.5 million tonnes, added 1.0 million tonnes to the Argentine crop that will be harvested next year. U.S. Soyoil Use For Biodiesel Falls In July The Census Bureau last week revised June U.S. soybean oil ending stocks 3,180 tonnes lower to 1.31 million tonnes and revised lower July stocks by 1,810 to 1.26 million tonnes. The usage of vegetable oils and fats in methyl ester (mainly biodiesel) production was revised up by 2,720 tonnes to 220,000 tonnes for June, and July consumption was pegged at 228,000 tonnes. Biodiesel usage of all fats and oils during July was 5,440 tonnes larger than most industry projections. However, the usage of soybean oil declined from a revised 127,000 tonnes in June to 123,000 tonnes in July, which was 16,800 tonnes less than the industry expected as the usage of animal fats in biodiesel production continues to expand. Inedible tallow and grease usage in U.S. biodiesel production jumped to 35,800 tonnes in both June and July from 22,700 tonnes in May. Palm oil usage in biodiesel has not been reported explicitly by Census due to confidentiality issues, but it is believed to have represented most of growth in use of fats and oils in biodiesel production from feedstocks not accounted for in the Census report. Soybean oil stocks are expected to remain above 1.13 million tonnes through the end of the current marketing year, but are seen declining by the end of the 2008-09 partially because of a decline in the soybean crush. USDA Expects Increase In China’s Soybean Imports China soybean imports in 2008-09 are forecast to increase to 38 million tonnes from 35.5 million tonnes a year earlier, a U.S. Agriculture Department attaché in Beijing said in a report released this week. Overall, the attaché said domestic oilseed production is expected to reach 56.2 million tonnes, an increase of 3.4 million tonnes from 2007-08, due to an increase in soybean and rapeseed production. In its monthly crop estimate report, USDA last month estimated China would produce 16 million tonnes of soybeans in 2008-09 compared to 13.5 million in the prior growing season. Imports in 2008-09 were forecast at 36 million tonnes, reported Reuters. Argentine Trucker Strike Disrupts Local Soy Trade Argentine truckers have said they will extend their 10-day blockade of crushing plants and port facilities in protest over pay and conditions and may expand the strike to Quequen, threatening to disrupt shipments of soybeans, soyoil and soymeal. The truckers’ protest started on August 27 at a crushing plant and port facility near Rosario, both operated by Bunge, with strikers extending the measure to the ports of Ramallo and Bahia Blanca in Buenos Aires province. Leading grains exporters in the country have been forced to switch shipments to the port of Quequen as a result. “They’re expected to start striking in Quequen port in the coming hours,” Omar Perez, transport secretary at the Truck Drivers’ Union, told Reuters last week. “It could be this afternoon, or first thing tomorrow.” Union leaders have vowed to maintain the strike until the export firms meet their demands for improved working conditions. Grains and edible oil exporters have condemned the strike and called for urgent action to prevent the country’s key grains trade from being affected. They warned last week that export commitments were being threatened. Argentine truckers blocked major highways during a prolonged strike by farmers earlier this year, which hit exports and left crushers without stocks. Most of Argentina’s grains and vegetable oils are shipped from the Rosario area ports, followed by Quequen and Bahia Blanca. Soy Complex Mixed On Stronger Dollar And Eased Concerns Over Frost The soy complex closed mixed on September 11 ahead of USDA’s September crop report amid continued strength in the dollar and reduced concerns about an early frost. USDA’s track record on estimating the crop is not much better in September than in August with the average difference between the September forecast and the final yield over the 20 years being 3.27 million tonnes versus 3.81 million tonnes for the August forecast. While the market may very well recover much of this month’s sell off in the near term, new lows eventually are expected to be made for the move on the realization of a larger crop than USDA has forecast and disappointing demand prospects. September bean futures closed up $12.68, finishing at $446.80; November lost $0.73, closing at $432.10; and January was down $0.92, ending at $438.07. September meal increased $14.55 closing at $385.81; October was $6.17 higher, finishing at $365.41; and December meal closed up $4.85, ending at $363.98. September soyoil was $15.21 lower to finish at $1036.16; October was down $15.87, closing at $1038.81; and December was $15.43 lower, closing at $1049.83. |
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