WASHINGTON, April 4, 2012 -With the most corn planted acres since 1937 expected this year, soybean acres are projected to decrease by one percent from last year, leading to better margins for soybean processors. Fewer acres means higher soybean prices, and drought in Brazil and Argentina means higher demand for U.S. soybean product exports, said National Oilseeds Processors Association (NOPA) President Tom Hammer.                                           

Although farmers planting corn this year have already prepared most of their intended acres for the crop, there is a possibility that the USDA reports might inspire some alterations for more soybean production. The only way to know how the corn-acreage increase will impact the number of harvested soybean acres is to wait for the June USDA report, Hammer said.

“By that time, we’ll have a better handle on South America situation,” he said. “The market didn’t expect quite the decline in soybean acres, but if you think about the conditions, it makes sense. Farmers enjoy planting corn right now.” He noted that despite fewer acres, growers will meet the continued demand from China and added global demand for U.S. soybean products due to weather issues in South America.,

“We’ve got the capacity,” he said, noting that U.S. soybean stocks as of March 1 were ten percent higher than last year. Similar circumstances in South America in 2009 led to higher U.S. soybean product demand that year, but Hammer said this year’s trend will not likely be as dramatic.

If soybean prices remain at $14 per bushel, processors will have to worry about encouraging the use of other, cheaper oils for domestic livestock producers, Hammer warned. He acknowledged the domestic customers buying soybean meal for their livestock feed are coming out of a tough year and will have to be wary of high input costs. Soybean prices steadily increased over the past month, reaching a six-month high at more than $14 per bushel.

However, a recent soy checkoff study indicated that the European Union’s energy policy could reduce U.S. soybean prices. The study, funded by the United Soybean Board (USB), shows the EU’s Renewable Energy Directive, which currently excludes biodiesel made from U.S. soybean oil in renewable energy quotas, could decrease U.S. soybean prices by as much as 35 cents per bushel. If left unresolved, the regulation would cost U.S. soybean farmers more than $1.1 billion per year, according to USB.

The study contends that the EU biodiesel regulation would negatively affect the price of U.S. soybeans as well as the cost of shipping U.S. soy to other markets. U.S. soybean farmers currently enjoy a 10-cents-per-bushel advantage over farmers from Brazil and Argentina on soy shipments to Europe, the study shows. However, on shipments to China and India, that shipping advantage over South America drops to less than 3 cents per bushel.

The EU’s policy requires all transportation fuels used there to include 10% renewable energy. In order to qualify as a renewable fuel, it must reduce greenhouse gas (GHG) emissions by at least 35%. The Europeans claim biodiesel made from U.S. soy reduces GHG emissions by only 31%. However, USB-funded research shows biodiesel made from U.S. soy reduces GHG emissions by 39% for U.S. soybeans shipped to and crushed in Europe, and 49% for processed U.S. soy biodiesel shipped to Europe.

Agriculture Secretary Vilsack emphasized USDA’s interest in expanding distribution of biofuel feedstocks during the 2012 Biofuels Leadership Conference in Washington. He said USDA is specifically working to help U.S. growers address the EU barriers.

Meanwhile, USB reported that certificates will be sent with every shipment of U.S. soy to the EU to verify U.S. soy complies with U.S. conservation laws and regulations that satisfy the policy’s criteria.


Original story printed in April 4th, 2012 Agri-Pulse Newsletter.

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