March 3, 2004

 

 

Bunge To Temporary Shut Down Soy Plant

 

Bunge Limited, the world's largest oilseed processor, announced that it will temporarily shut down operations at a soybean crushing plant in Destrehan, Louisiana due to tight US soy supplies.

 

Processing at the plant, which feeds both domestic and export markets with soybean meal and soybean oil, will halt in early March, the company said in a statement.

 

Bunge said Destrehan's grain elevator that loads vessels for export will continue to operate. Bunge said it expected to keep the majority of workers employed at the plant.

 

"Unfortunately, the smaller-than-anticipated U.S. soybean crop in 2003 coupled with rapid U.S. soybean exports have significantly decreased our margins at Destrehan," said Carl Hausmann, president and chief executive of Bunge North America.

 

"While it is always difficult to idle a facility, even temporarily, we believe this is the appropriate step to take until domestic supplies and adverse conditions in the export market improve," Hausmann added.

 

The United States, the top grower and exporter of soybeans, was hit by drought last summer that reduced its soybean crop by 12 percent from 2002. Record exports to China since then have tightened dwindling U.S. supplies, sending projections for U.S. end-season stockpiles of soy next September to 27-year lows.

 

The tight supply outlook now includes lower-than-expected crops to be harvested in Brazil and Argentina in coming weeks because of weather problems. The tight supply outlook has pushed Chicago Board of Trade soyoil prices to 19-year highs and CBOT soymeal to 6-year highs this week.

 

But the price of soybeans has also skyrocketed to 15-1/2 year highs, squeezing profit margins.

 

Bunge's announcement follows similar moves by other big crushers.

 

On January 5, Cargill Inc. temporarily shut its Guntersville, Alabama, soy plant because of tight supplies and poor profits.

 

"It makes no sense for us to produce exportable surpluses in the short term, only to exacerbate the problem of dwindling domestic supplies we'll face next spring, so we are taking the appropriate action now," said R. Wayne Teddy, president of Cargill's North American Grain and Oilseed Crushing business.

 

In mid-January, U.S. cash grain traders said that top U.S. soybean crusher Archer Daniels Midland, had told its soymeal customers that it was reducing its crush by 10 percent in an attempt to ration dwindling supplies.