In South America the soya oil export basis remained firm due to thecurrent heavy exports to China and other destinations.In Brazil soybean stocks fell below the year-ago level in June, thedecline accelerated in July and will further widen in August. We estimatetotal Brazilian soybean stocks as of end-August at 17.7 Mn T, down by 2.3Mn T from a year earlier. A heavy pace of exports and crushings was notedso far this season and is expected to be high also in August and probablyin September. As of end-Sept 2004 we estimate total soybean stocks to bedown by 2.7 Mn T from last year. This will reduce Brazilian exports ofsoybeans and products during Oct/Jan 2004/05, shifting world demand to USorigin. The latest OIL WORLD estimates of Brazilian soybean supply &demand crop estimate of 50.2 Mn T, but we are aware that there is still awide range of estimates. At the end of last week ABIOVE estimated the cropat 50.6 Mn T while IBGE reduced its production estimate to only 49.0 Mn T.The IBGE number would, of course, lead to much lower soybean stocks as ofend- Aug and correspondingly smaller Brazilian crushings and exportsduring the remainder of this season. Soybean crushings of ABIOVE membersreached 2.55Mn T in June, the second-highest monthly number, only slightlytrailing the 2.57 Mn T processed in May. This brings the total soybeancrush for all of Brazil to about 2.89 Mn T in June (up 7% from last year)and the cumulation for Febr/June 2004 to 12.87 Mn T (up 7%). Soybeanexports in July amounted to 2.4 Mn T, down from 3.71 Mn T a month earlierbut still up sharply from 1.8 Mn T registered in June last year, accordingto government data. Brazilian exports of soya meal were smaller thanexpected at 1.2 Mn T in July and this contributed to an increase instocks. Exports had been much higher at 2.18 Mn T in June 2004.

In Argentina soybean crushings are likely to reach a record 12.2 Mn T inApril/Aug 2004, up by almost 1.1 Mn T or 10% from a year earlier. Soybeanexports are likely to decline to 5.55 Mn T, mostly to the destinationChina. We estimate total soybean stocks as of end-August to be 15.7 Mn T,down by 0.8 Mn from a year earlier.