April 29, 2013

Global soymeal supplies may remain tight till June

Due to a slow start to exports of South America's new soy crop this year, global soymeal supplies are likely to remain tight into May and possibly even June.

According to Hamburg-based oilseeds analysts Oil World on Tuesday (Apr 23), consumers of soymeal, a major animal feed, have been awaiting large exports of new crop Argentine and Brazilian soys in early 2013 to relieve a tight global market. Prices hit record highs in September 2012 as drought hit the US crop.

"Arrivals of soy and products in the importing countries will remain insufficient in April and partly also in May as a result of the continuing severe reduction of exports in March," Oil World said. "This affects primarily consumers of soymeal, reflected in the unusual strength of soymeal prices for prompt delivery," the firm added.

New crop exports from Brazil have been limited by congestion in Brazilian ports, while Argentine farmers have been reluctant sellers in the face of uncertain government policy. Prices for nearby deliveries of Argentinian high-protein soymeal rose to US$615 a tonne cost, insurance and freight (cif) Rotterdam on Tuesday from US$500 a tonne on April 2. Brazilian high-protein soymeal rose to US$590 a tonne cif Rotterdam compared with US$470 a tonne on April 2.

"We are now seeing 70-day delays in shipments. It has never been that long," one European trader said. Tight soy prices also pushed up prices of rapemeal, which can be used as a substitute. Rapemeal for May delivery was quoted at €316 (US$410) a tonne free on board (fob) lower Rhine on Tuesday compared with €287 (US$374) a tonne on April 2. "On the European market, the small arrivals in recent months and the still-delayed shipments from South America have created a severe shortage in the nearby (delivery positions)," Oil World said. "A notable improvement of soymeal supplies in Rotterdam and other European trading spots may not occur before June."