March 25, 2004

 

 

US Wilmington Rules Out Further Brazil Soymeal Purchase

 

The first batch of Brazilian soymeal bought by the Wilmington Bulk LLC consortium of hogs and poultry producers will arrive in the United States in May, and the company on Wednesday ruled out further purchases.

 

"We are fully covered until the new-crop comes in," said Wilmington spokesman Jeff Turner, referring to the harvest of this year's U.S. soybean crop which begins in September.

 

Turner, vice president of governmental affairs at Murphy Brown LLC, a unit of Smithfield Foods Inc., the world's largest pork producer, said Wilmington Bulk has bought 100,000 tonnes of Brazilian soymeal for its operations.

 

He said another 100,000 tonnes have been bought by Murphy Brown, which is part of the Wilmington consortium.

 

Wilmington's statement that it will not import any more soymeal follows calls by farm groups for a temporary halt on imports of soymeal and soybeans from Brazil due to the crippling Asian rust plant fungus prevalent in the country.

 

The company maintains that high domestic transportation costs make it cheaper for the Wilmington, North Carolina-based consortium to import soymeal than buy it domestically.

 

CBOT soybean futures have breezed past the psychologically important $10.00-a-bushel mark and hit multiyear highs amid tight U.S. supplies and rising concerns over weather damage to the crop in leading exporters Brazil and Argentina.

 

Speculation has been rife that the high prices could drive end users like livestock and poultry producers to turn to importing soymeal from Brazil and Argentina, especially in the spring and summer when U.S. supplies tighten further.

 

That speculation has gained ground since a U.S. Agriculture Department study concluded that imports of soymeal and soybeans do not pose a significant threat to U.S. soybean plants.

 

Grain analysts have said that unless the high prices ration export demand, domestic soybean supplies could run out by July if U.S. processors continued their current pace of crushing soybeans into soymeal and soyoil, used largely in cooking.

 

U.S. soybean stocks are projected by the USDA to be the lowest in 27 years this marketing year ending May 31 due to a short crop and brisk exports.

 

Turner said the first batch of about 35,000 tonnes will arrive at Wilmington port in North Carolina in May, with another two similar-sized cargoes arriving in June and July.

 

He said the remaining 100,000 tonnes will arrive in three shipments in August and September, adding that Wilmington had no idea that U.S. soybean prices would rise to 15-1/2-year highs when it decided to import soymeal.

 

Turner said Wilmington had no intention of importing soybeans from Brazil. He also said the group has enough domestic and imported feed to last it through summer.

 

The consortium uses about 140 million bushels (3.6 million tonnes) of corn, 1.4 million tonnes of soymeal and an estimated 40 million bushels (1 million tonnes) of feed wheat a year.