January 8, 2008

 

Soy, the Comeback Kid in US market?

 

 

As recently as a year ago, US farmers dumped the tradition of soy-corn rotation to plant corn acres to feed the burgeoning number of ethanol plants requiring corn as feedstock.

 

Corn-on-corn planting was common and farmers who traditionally planted half corn and half soy as bulwark against volatile prices planted 100 percent corn.

 

All-in-all some 8 million acres of soy was taken out of production to plant corn.

 

Now, it may be soy's turn in the limelight a soy shortage looms and futures soared 84 percent over past year figures.

 

However, the high prices are also hurting farmers, who see foreign customers increasingly heading for the exit when they are quoted the prices.

 

Add to that the rising freight costs to transport US grains across the Pacific to Asia, where the market is, and the cost of corn would be almost double what it was a year ago.

 

Still, despite high prices, demand is growing, especially in emerging markets like China.

 

The weaker dollar also helped soften export prices, bringing them down from where they would have been.

 

Rising fertilizer costs, although a huge concern is also mitigated by the fact that soy would not need the massive levels of fertilizer application as compared to corn.

 

Aquaculture could also be another big area as soy-based fish feeds may be in time to tap into calls to open up offshore aquaculture farming in the US. The calls were sparked in part by US concerns on food safety issues arising from Chinese seafood last summer. The US imports 90 percent of the seafood it consumes and authorities have conceded there is no way to check every single shipment. At present only 1 percent of imported seafood shipments are checked for harmful chemicals.

 

Organisations promoting soy use have marketed soy-based fishfeed as a sustainable alternative to fishmeal, which are getting pricier as the ocean's wildstock dwindles. 

 

Outside the US also lies a vast market for soy-based fish feed, again in Asia, which produces more than 95 percent of the world's farmed seafood.