Oil Crops YEARBOOK -- SUMMARY March 19, 2007 March 2007, ERS-OCS-2007s Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The text of the yearbook will be available electronically about 1 week following this summary release. ----------------------------------------------------------------------------- March 19, 2007 Large Rise in 2005/06 Soybean Stocks Due to a Record Supply, Lower Exports Sharply lower soybean prices in the spring of 2005 reduced U.S. acreage planted by 4 percent to 72.0 million acres. Despite very dry weather in some States, timely August rainfall helped raise the 2005 national average soybean yield to a record-high 43.0 bushels per acre. The higher yield helped to compensate for lower U.S. acreage, so that 2005 soybean production declined a modest 61 million bushels to 3,063 million. Larger stocks carried over from the previous bumper crop raised the total 2005/06 soybean supply to an all-time high at 3,322 million bushels. Despite the advantages of a record soybean supply and a weak dollar, 2005/06 use experienced an unusual decline. U.S. soybean exports dropped to 947 million bushels, down 150 million from 2004/05, due to U.S. transportation difficulties and unusually heavy foreign exports in late 2005. In contrast, the liberal availability of soybean supplies benefited domestic crush margins and encouraged an increase in crush by 43 million bushels to 1,739 million. Ending stocks then swelled by 75 percent to 449 million bushels. Soybean prices demonstrated a remarkable resistance to pressure from the ample domestic and foreign supply, with only a modest decline in the 2005/06 national average to $5.66 per bushel from $5.74 in 2004/05. World soybean output rose in 2005/06 by a modest 1 percent to 217.9 million metric tons. Brazilian and Argentine soybean producers were responsible for almost the entire gain. Severe debt problems curtailed Brazil’s 2005/06 harvested soybean area by 3.5 percent to 22.0 million hectares. Overall better yields allowed for a small production increase to 55.0 million metric tons from 53.0 million in 2004/05. A higher concentration of marketing in late 2005 and summer 2006 created a surge in 2005/06 soybean exports from Brazil to 25.9 million tons, compared with 20.1 million in 2004/05. In contrast, excellent economic conditions in Argentina boosted that country’s 2005/06 soybean area by 6 percent to 15.2 million hectares. Increased yield and area raised Argentine soybean output from 39.0 million tons in 2004/05 to a record-high 40.5 million tons. Argentine soybean processors were a main beneficiary of the supply increase, turning out a robust 17-percent increase in the 2005/06 crush to 31.9 million tons. In China, growing demand and a protein deficit created by lower supplies of cottonseed meal and fish meal helped expand soybean meal consumption by 18.5 percent to 27.8 million tons in 2005/06. This prompted China’s processors to import 28.3 million tons of soybeans, compared with 25.8 million in 2004/05. China alone accounted for 44 percent of world soybean imports and virtually all of the yearly increase in 2005/06 global trade. Due to its more ample domestic output and rising international prices, China’s imports of soybean oil fell 200,000 tons to 1.5 million. China’s palm oil imports also reached a record 5.0 million tons against 4.4 million in 2004/05. Worldwide interest in using rapeseed oil, soybean oil, and palm oil for making biodiesel has intensified in reaction to a sharp spike in petroleum prices. In particular, the EU-25 had rapidly rising biodiesel production and smaller domestic oilseed crops, which helped draw in larger 2005/06 imports of soybean oil, palm oil, and sunflowerseed oil. The price of rapeseed oil, the main feedstock for EU biodiesel, increased 17 percent from 2004/05, and was a major factor in leading other vegetable oil prices higher.