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Soybean & Soy Meal Running at an Unsustainable Pace

posted on February 27, 2004


The Dow Jones Newswire says the New York Board of Trade is preparing its proposed ethanol futures contract for international markets. A document distributed to floor traders says the contract could be used to manage risk associated with ethanol produced in 32 countries on six continents. A spokesman for the Board declined to discuss the contract, which has yet to be launched.

Whether ethanol futures will be a hot trading instrument is a question not faced right now in some existing commodity markets, most notably soybeans.

Soybean & Soy Meal Running at an Unsustainable Pace There's widespread agreement among analysts that soybean and soy meal usage is running at an unsustainable pace.

The National Oilseed Processors Association, or NOPA, last week reported the January bean crush at 138 million bushels, well above trade estimates. In order to meet USDA's projected totals for the year, the domestic crush would have to decline by 17 percent, or nearly 20 million bushels a month.

That's raised the strong possibility of soybean rationing in the spring. An analyst for Archer Daniels Midland predicted this week that a supply crisis will hit the U.S. market in April and continues through May or June. He said Asian Rust problems in the South American crop are making U.S. companies reluctant to import soybeans.

Beyond the rust problems, estimates for South American production continue to drop. The Brazilian government has lowered its projection to 57.6 million tons, while others have pushed estimates as low as 55 million tons.

Analysts note that demand for soybeans remains constant despite nearby futures values that this week soared past the $9.00 level.


Tags: agriculture crops markets news