November 29, 2004

US Registers Higher Soybean Processing Rates

Soybean consumption in the US increased 6.7 percent in October, according to a government report. This comes as processors such as Archer Daniels Midland Co. and Bunge Ltd. crushed more supplies arriving from a record harvest.

A record 4.68 million tons of soybeans were crushed to make animal feed and vegetable oil last month. The figure rose from 4.38 million tons in the same month last year, the US Census Bureau said.

"Supplies of new-crop soybeans increased and positive processing margins boosted the crush to a record," said Anne Frick, senior oilseed analyst for Prudential Securities in New York. Processors were rebuilding inventories of animal feed and vegetable oil depleted at the end of August, before the harvest, when soybean supplies fell to a 27-year low, Frick added.

Soybean prices have plunged 47 percent since reaching a 15-year high of $10.64 a bushel on April 5 as crop conditions improved. Soybeans for January delivery rose 6.75 cents, or 1.2 percent, to $5.6125 a bushel on the Chicago Board of Trade on Tuesday, the highest closing price since Sept. 15.

Soybean prices increased 9.9 percent since the first discovery of a virulent fungal disease in Louisiana Nov. 10, which was followed by similar cases in five other states in the South. A futures contract is an agreement to buy or sell a commodity at a specified price, quantity and date.

Inventories of soybean oil at the end of October fell 10 percent to 1.27 billion pounds compared with 1.412 billion a year earlier and up 18 percent from 1.076 billion in September, the Census Bureau said. Three analysts surveyed by Bloomberg expected 1.124 billion pounds on average.

Soybean meal and hull stocks, a vegetable-based protein used as animal feed, rose 12 percent to 357,892 short tons in October compared with 317,834 tons a year earlier and up 70 percent from 210,737 in September, according to the Census Bureau. Traders in a Bloomberg survey expected on average 308,000 tons on Sept. 31.

Soybean production in the United States will rise 28 percent to 3.15 billion bushels compared with the drought damaged crop a year earlier, the Agriculture Department predicted on Nov. 12. The US is the world's biggest grower of soybeans.