FarmPolicy

August 23, 2017

India’s Imports of Soybean Oil are Surging– Importing More than China

Vibhuti Agarwal reported on Saturday at The Wall Street Journal Online that, “Indians are acquiring a strong taste for soybean oil thanks to lower prices, fueling a surge in imports at a helpful time for a global market struggling with a glut of the commodity.

India’s imports of soybean oil have quadrupled in the last five years to more than 4 million metric tons this year, according to data compiled by the country’s vegetable oils industry body. India’s soybean oil imports are expected to rise over the next 10 years by as much as 40%, the U.S. Department of Agriculture estimated in May.”

The Journal article stated that, “India dethroned China two years ago as the world’s largest importer of soy oil. Some Indian consumers who have switched to soy oil cited the steep drop in prices—35% since 2012. Prices of palm oil, its main rival used widely in restaurants and by poorer Indians, have mostly been moving sideways.”

Agarwal added that, “The global soybean-oil market has been slumping for two years, as bumper harvests of soybeans everywhere from America to Argentina coincided with a decline in imports by China stemming from rising domestic production. Soybean production around the globe will increase about 5.6% to 330.43 million tons from last year’s 312.97 million tons, the USDA forecast.”

In addition to a growing middle class that can afford soybean oil, India’s increase in imports reflect a multiyear drop in domestic production. That decline was especially pronounced last year, when production of soybeans fell nearly 20% to its lowest in more than a decade after poor monsoon rains and pest attacks hit yields,” the Journal article said.

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Russia Moving to Retake Leadership in World Wheat Trade

Bloomberg writer Anatoly Medetsky reported late last week that, “Long known for its oil and gas, Russia is now moving to retake leadership in the world wheat trade it last held when the Czars ruled. In the process, it’s reshaping the market for one of the world’s most important traded food products.”

The article explained that, “From the Black Sea coast and the Volga River heartland to the sun-scorched steppes of Siberia, Russia’s farm belt is enjoying a renaissance, with grain at the leading edge. Turbocharged by the 45 percent drop in the ruble against the dollar over the last few years and bumper crops, local producers are crowding into export markets long dominated by big western players.

“Last season, Russian topped the U.S. in wheat exports for the first time in decades and is expected to extend those gains to displace the EU from the top spot this year, according to the U.S. Department of Agriculture. Investors from local farmers to billionaire tycoons are pumping money into the business.”

Medetsky added that, “Russian wheat has crowded out U.S. supplies in Egypt, the world’s biggest buyer, and is gaining footholds in some other countries, such as Nigeria, Bangladesh and Indonesia. That’s four decades after the Soviet Union turned to U.S. shipments of wheat and corn to offset shortfalls in its own harvests. Over the last decade, Russia has been the biggest single source of growth in wheat exports, vital to meeting surging global demand.”

“Farmers trace the roots of the rebound to the Kremlin’s move a decade ago to allow land to be bought and sold freely. That set off a wave of investment in new equipment, fertilizers and expansion of farms into lands long left fallow. Government subsidies and the ruble devaluation, along with good weather, have added to harvests in recent years,” the article said.

Graph From Bloomberg News

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As Farm Economy Struggles– Grain Industry Wants to Double Ethanol Exports

Categories: Ethanol

Gregory Meyer reported today at The Financial Times Online that, “The US grain industry aims to double exports of ethanol, volumes that could boost demand for corn and aid a struggling farm economy.

“The US Grains Council, a non-profit export group, is preparing plans to promote American-made fuel ethanol in countries including Mexico, Japan and India, said Tom Sleight, its president. It comes after the council held a series of workshops on ethanol use in China, according to its annual report.

“The US, the leading biofuel producer, is on track to export 891m gallons of ethanol this year, according to the Renewable Fuels Association.  ‘Two billion gallons is a short-term goal,’ Mr Sleight said in an interview. ‘We know it’s not going to happen overnight.'”

Mr. Meyer explained that, “The domestic US market is saturated because most vendors sell petrol with no more than 10 per cent ethanol. Most US ethanol is made from corn, and the amount of corn used by the industry has levelled off at an estimated 5.275bn bushels this year after a furious rise in the previous decade.”

The FT article added that, “The council runs its ethanol export promotion programme in partnership with USDA and two ethanol trade groups, Growth Energy and RFA. Mr Sleight cautioned that ‘a lot of things need to fall into place’ before it could sharply expand the programme.”

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Market Conditions Prompts “Early Farm Bill” Discourse

Categories: Farm Bill

Renée Jean reported yesterday at the Williston Herald (N.D.) Online that, “The ink is barely dry on $7 billion in 2015 payments from the 2014 farm bill’s market-based programs to assist farmers with low prices, but the adequacy of both Agriculture Risk Coverage and Price Loss Coverage payments likely to be a hot topic for 2017.

“While the Farm Bill doesn’t expire until Sept. 30, 2018, some are calling for a new farm bill as early as possible. Republican Senator Chuck Grassley (R-IA), for example, on Wednesday said he cannot see why the bill couldn’t get done a year in advance, to better help farmers with prices this year, which have been even lower than 2015.

“That kind of talk is pushing senators in both Montana and North Dakota to get their ear to the farm ground early on the farm bill. North Dakota Sen. Heidi Heitkamp (D) and Montana Senators Jon Tester (R) and Steve Daines (R) have already scheduled listening tours to collect input. North Dakota Sen. John Hoeven said he would start his listening tours in 2017.”

The article noted: “‘We should start early and get this wrapped up as soon as possible,’ Daines said. ‘I think it is ridiculous we cannot get a farm bill put together sooner, to remove that uncertainty from the farmer. They face uncertainty all the time from the weather and other things. They don’t need additional uncertainty from Washington, D.C. Let’s get this done a year in advance.'”

Yesterday’s article added that, “‘The push is going to be on to get this done sooner than later and not drag this out,’ [Sen. Heitkamp] said. ‘I’d like to see a farm bill reauthorized before the termination of this one in the Senate.'”

Nonetheless, Ms. Jean pointed out that, “Hoeven, who sits on the committee that writes the farm bill, said an early bill is not only unlikely but impossible. But, he added, they can work on other things to help farmers in the meantime.”

In a separate article last week at the the Sidney Herald (Mont.) Online, Renée Jean reported that, “The ball is already on the ground and rolling for the 2018 farm bill, and U.S. Sen. Steve Daines, R-Mont., had his ear to the ground for those issues most on farmers’ minds during a visit to Sidney Sugars Wednesday, where growers talked about the increasing difficulties they face getting to a profitable harvest.”

The article noted the importance of crop insurance to producers: “Crop insurance is becoming more and more necessary to the survival of family farms, said Don Steinbeisser Jr.

“‘My grandfather didn’t even know what it was, much less use it,’ he said. ‘Now if you have a bad year, you need it. The bank’s not going to ignore it.'”

Despite the chatter about an early Farm Bill, recall that last month, the Chairman of both the House and Senate Ag Committees expressed reluctance about the concept of an early Farm Bill while speaking at a public forum at the Kansas State Fair.

At that forum, House Ag Committee Chairman Mike Conaway (R., Tex.) noted that low prices have spurred calls for re-opening the Farm Bill and for consideration of ad hoc disaster assistance; he indicated that “we are going to be very resistant to that.” Similarly, Senate Ag Committee Chairman Pat Roberts (R., Kan.) pointed out there could be a risk of losing more than could potentially be gained if the Farm Bill was opened back up.

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