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U.S. soybean meal exports up, soybean exports lower than expected

Expectations for an increase in soybean acreage in 2006 are
driven
by the cost advantage of soybeans over competing crops like corn, said a

University of Illinois Extension marketing specialist.

"Other factors driving these expectations include increased acreage of
double-cropped soybeans stemming from an increase in acreage of soft red

winter wheat and a rebound in acreage in Minnesota and the Dakotas if
spring weather is more normal," said Darrel Good.

Good's comments came as he reviewed consumption, stocks, and acreage of
soybeans.

"The magnitude of U.S. soybean exports during the current marketing year

continues to be disappointing," he said. "The USDA now forecasts 2005-06

marketing year shipments at only 900 million bushels.

"At the beginning of the 2005-06 marketing year, the USDA expected U.S.
exports would reach a record 1.115 billion bushels. That forecast has
been
lowered every month since October 2005."

So far this year, USDA weekly export estimates have been tracking the
monthly Census Bureau estimates very closely, he noted. Through January
2006, both the cumulative inspections estimate and the cumulative
estimate
from the Export Sales report were just five million bushels below the
Census Bureau estimate of 510.7 million bushels.

As of March 16, 2006, exports totaled about 671 million bushels, 200
million less than on the same day last year. Only Taiwan and Mexico have

imported more U.S. soybeans this year than were imported last year.

"Shipments to China, which have accounted for 46 percent of all U.S.
exports, are running nearly 22 percent behind the pace of a year ago,"
said
Good. "Unshipped sales of U.S. soybeans to all destinations on March 9,
2006 totaled only 98.3 million bushels, compared to 119 million on the
same
date last year.

"Only China has larger sales on the books than at this time last year.
That
total, however, is only 29 million bushels. With a record-large South
American harvest under way, U.S. exports may struggle to reach 900
million
bushels by August 31, 2006."

The domestic crush of soybeans so far this year has exceeded the early
USDA
forecast. The projection in September 2005 was for a marketing year
crush
of 1.685 billion bushels, 11 million less than the crush of the previous

year. The March 2006 forecast was at 1.72 billion bushels, 1.4 percent
larger than last year's crush.

"The cumulative crush through the first five months of the marketing
year
was 2.2 percent larger than that of a year ago," said Good.
"Indications,
however, are that the crush slowed in February. The larger-than-expected

crush to date has been fueled by slightly larger soybean meal exports
than
forecast at the beginning of the year and a slightly lower meal content
of
the 2005 crop."

Soybean oil consumption is currently expected to be 19.125 billion
pounds,
compared to the September 2005 forecast of 19.15 billion pounds. The
soft
export market for U.S. soybean oil along with the record high oil
content
of the 2005 crop is expected to result in year-ending U.S. oil stocks of

2.679 billion pounds, only slightly below the record year-ending
inventory
of 2.877 billion pounds in 2000-01.

Good noted that the USDA will release the estimate of March 1
inventories
of U.S. soybeans on March 31.

"If seed, feed, and residual use of soybeans is following the pattern
established during the first quarter of the marketing year, consumption
of
U.S. soybeans during the second quarter of the marketing year should
have
been near 827 million bushels, about 98 million less than use during the

same quarter last year," said Good.

"March 1 stocks of soybeans, then, should have been near 1.675 billion
bushels, 294 million more than the inventory of a year ago and 218
million
above the previous record inventory for that date in 1999."

The USDA will also release the annual Prospective Plantings report on
March
31. That report is expected to show a significant increase in intentions

for soybeans compared to last year's planted acreage of 72.142 million
acres. Planted acreage in 2005 was 3.066 million less than planted in
2004
and 1.768 million less than intended in March 2005.

"The decline in 2005 was spread across all regions, but the largest
decline--1.55 million acres--was in the western Corn Belt," said Good.
"Plantings declined by 400,000 acres in Minnesota and 800,000 acres in
North Dakota. Combined acreage in those two states was 700,000 less than

March intentions, reflecting a wet spring and a large area of prevented
plantings."

Expectations for 2006 U.S. soybean acreage appear to be centering on an
increase of about two million acres, to a total of 74.1 million.

"At that level of planting, harvested acreage would likely be near 73
million," he noted. "U.S. average yields have been record large in the
past
two years, at 42.2 and 43.3 bushels, respectively. The National Weather
Service forecast through June 2006 suggests no significant deviation
from
normal weather conditions in any production area.

"A yield of 42.8 bushels in 2006, then, would produce a crop of 3.124
billion bushels, equal to the record crop of 2004 and 38 million larger
than the 2005 crop."

While consumption of U.S. soybeans during the 2006-07 marketing year
will
likely be larger than the 2.782 billion projected for this year, a crop
of
3.124 billion would still lead to another buildup of U.S. soybean
stocks,
perhaps to near 670 million bushels by Sept. 1, 2007, Good added.

"Stocks at 670 million bushels would project to a 2006-07 marketing year

average farm price near $5.30, even if strong speculative demand for
soybeans continues," Good said. "Without that speculative demand, prices

would be much lower.

"The futures market is currently reflecting a 2006-07 marketing year
farm
price near $6."

Expectations for an increase in soybean acreage in 2006 are driven by the cost advantage of soybeans over competing crops like corn, said a University of Illinois Extension marketing specialist.

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