US soymeal haunted by quality issues

If procuring soy for crushing is difficult for US processors due to tight stocks from last year's crop, finding quality oilseeds to produce high protein soymeal for feed is even more difficult.

 

Soy quality issues have been a major concern for crushers and end-users this year.

 

Finding quality soy is an issue, with farmers holding supplies tight, meaning anyone holding meal receipts is unwilling to expose them to physical delivery, said Joe Victor, analyst with Allendale Inc.

 

Much of the remaining supplies do not grade well enough for high protein meal, which has 48 percent protein content. Protein meal that is delivered against the CBOT contract must contain at least 47.5 percent protein.

 

 

The problem of producing high protein meal magnified once processors ran out of soy in the eastern Midwest and begun bringing in lower-quality soy from the western belt, said a CBOT broker.

 

Processors and exporters fought for the same soy in the eastern belt and drained the quality supplies as well as driving up prices, the broker said.

 

Much of the late-harvested soy crop were stored last autumn in less than ideal conditions which caused the current quality problems.

 

Trouble finding quality soy typically happens near the end of the marketing year, said Don Roose, president of the US Commodities.

 

It was a difficult year for soy storage, as winter temperatures fluctuated from warm to cold, said Roose.

 

The 2008 autumn harvest carried late into November, and much of the soy crop were harvested when they were not completely storable, going in wet and opening the door to mildew and mould issues, Roose added.

 

These issues make them harder to convert to high protein meal.

 

 

This will be an issue for feeders as they will have to feed more meal to the livestock to reach a certain protein level, and it is not cost-effective at current feed values, Karlin said.

 

He said the problem is that the meal is not substitutable, particularly with tight canola supplies.

 

This could affect the poultry sector, a major consumer of soymeal feed.

 

Of all soymeal produced in the US, 50 percent is used in the poultry sector. Flocks are down, but egg sets and chick placements have consolidated at 94-96 percent of year-ago levels for the past four to five weeks, said Victor.

 

Egg sets are a key barometer of future meal demand, Victor added.