February 17, 2004

 

 

Brazil Soybean Crush Set To Rise

 

Following the outbreak of bird flu in Asia and United States, soybean crush is expected to increase in Brazil as a result of an increase in poultry demand.

 

Soymeal is a major ingredient in poultry rations, and Brazilian crushers expect domestic demand to rise due to extra export business by the world's No. 2 poultry exporter.

 

"Brazilian chicken exports will expand and we should expect to see increased demand for soymeal," said the director of a Sao Paulo-based grains multinational.

 

The Brazilian Association of Vegetable Oils Industries (Abiove) estimated domestic soymeal demand would rise to 8.3 million tonnes in 2004/05 (February/January) from 8.0 million tonnes last year.

 

Traders expect soymeal demand to be revised upwards as well, and they also see an increase in soyoil exports to China.

 

Following the slaughter of millions of chickens to combat bird flu, China may reduce soybean imports and raise soyoil purchases because it will need less soymeal, crushers said.

 

"Soymeal consumption will rise in Brazil and if soyoil exports rise as well it will be the best of both worlds," said Cesar Borges, vice president of Caramuru Alimentos, one of Brazil's biggest soy crushers.

 

But he added that it was still too early to see any increased Chinese demand for soyoil.

 

"Chinese purchases of soybeans leapt to 21 million tonnes from zero in only a few years. China may now buy fewer soybeans, but domestic demand for soyoil isn't going to fall," he said.

 

Brazil has record soybean supplies this year and prices for soy products are also high due mainly to tight supplies in the United States.

 

"Brazil has great flexibility in handling the harvest and has supplies for domestic and export markets," said Renato Sayeg at grains broker Tetras Corretora.

 

Soyoil prices reached a 15-1/2-year high last week.

 

"(Soyoil) should be highly profitable for at least the first half of the year (before the U.S. 2004/05 harvest)," said Sayeg.