by Meyer Sosland
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Global oilseed production for 2007-08 is projected at 391.3 million tonnes, down 13.7 million from 2006-07, according to a recent report from the U.S. Department of Agriculture (USDA). Extreme Northern Hemisphere weather, ranging from torrential rains to late freezes to heat and drought, has taken a toll on rapeseed, canola and sunflowerseed yields, while a steep drop in U.S. planted area has curbed soybean output.

The USDA projected total 2007-08 oilseed consumption at 339.5 million tonnes, up nearly 10 million from the previous season. Global stocks at the end of 2007-08 are forecast at 57.7 million tonnes, down 14.5 million or 20%, from 2006-07.

For soybeans, world 2007-08 production is projected at 221.6 million tonnes, down 6% from the previous season, while total use is forecast to rise by 4.3% to 233.2 million tonnes. Soybean stocks at the end of the current marketing year will be drawn down to 51.6 million tonnes, a 20% decline from 2006-07 and the smallest level since 48.5 million tonnes were on hand at the end of the 2004-05 season.

In mid-August, the USDA pegged 2007-08 soybean output in the U.S., the world’s largest producer, at 71.5 million tonnes, down some 18% from 86.8 million in 2006-07. Although the season’s first field surveys pointed to yields near the historical trendline, U.S. soybean plantings were down as growers switched to price-competitive maize, and harvested soybean area is forecast to be the lowest since 1995-96.

After the field surveys were completed, continual heavy rains plagued northern U.S. soybean growing areas. In southern Minnesota, rain totals were up 465% from the long-term average for the first 21 days of August, northern Iowa totals were up 200% to 300%, eastern Nebraska was up 248% and Wisconsin was up more than 400%.

The situation brought widespread flooding and raised concerns about field conditions. Some analysts said up to 20% of the U.S. soybean crop — about 14 million tonnes — could be vulnerable to sharply lower yields or loss.

Based on pre-flood conditions, the USDA forecast 2007-08 U.S. soybean consumption at 53.46 million tonnes, just below the record 53.51 million set in 2006-07. U.S. exports in the 2007-08 marketing year were projected at 27.8 million tonnes, down 7% from the record 29.9 million set the previous season.

U.S. ending stocks for 2007-08 were projected at 5.99 million tonnes. If the ending stocks forecast is realized, the level would mark a 60% plunge from the 15.7 million at the end of 2006-07, but would remain above the 3.1 million at the end of 2003-04.

Benchmark U.S. soybean prices have fluctuated regularly in recent months, responding to changing weather, and were moving higher at the end of August. But given the uncertainty, USDA left its forecast 2007-08 average soybean price unchanged, in a range of $266 to $303 per tonne.

A big price rally is likely to be tempered by adequate supplies in the Southern Hemisphere. The harvests completed in the 2006-07 marketing year in Argentina and Brazil each set record highs, at 47.2 million tonnes and 59 million, respectively.

Each has abundant stocks available to the world market, and when soybean prices began to advance in August, producer cash sales accelerated. Deliveries of South American soybeans to the export market should strengthen considerably into early 2008.

Argentina exported 8 million tonnes of soybeans in 2006-07, and its 2007-08 shipments are forecast at a record 10 million tonnes out of a 47-million-tonne crop.

Brazil’s 2006-07 soybean exports reached 24.6 million tonnes, which should be surpassed by a record 29.6 million tonnes in 2007-08. Brazil’s soybean planted area should expand slightly, resulting in a record 61-million-tonne harvest.