January 14, 2004

 

 

US Soybean Prices Sharply Higher On Cattle Waste Ban Speculation

 

Speculation that the Food and Drug Administration will tighten its ban on use of cattle remains in livestock feed has spurred U.S. soybean prices to end sharply higher on Tuesday. 

 

One agribusiness source, who asked not to be identified, said he was expecting an FDA announcement by the middle or end of this week and that it likely would involve tightening some rules on the use of cattle blood in animal feed.

 

The FDA had little to say, repeating only that it was examining its 1997 ban on using cattle remains in cattle feed to see if the rule should be modified or broadened to include other livestock feed.

 

"We are considering changes to the feed ban regulations," said FDA spokeswoman Rae Jones. "No announcement today."

 

Soybean traders at the Chicago Board of Trade are closely watching the FDA's livestock feed rules. A tightened ban on cattle remains in livestock feed would be bullish for the soybean market because it would likely result in higher use of soymeal, produced from crushed soybeans, as a high-protein ingredient in feed for U.S. hogs, chickens, cattle and other livestock.

 

Soybean futures prices at the Chicago Board of Trade briefly rose by as much as 26 cents a bushel to a 6-1/2 year high on market talk that the government was about to make an announcement on tightening U.S. livestock feed regulations. Soybeans for March delivery closed up 16-1/4 cents at $8.39 a bushel.

 

The rise in soy prices also came one day after the U.S. Department of Agriculture said U.S. soybean ending stocks were projected in September 2004 at 125 million bushels, a 27-year low.

 

After the nation's first case of mad cow disease was found in a Washington state dairy cow last month, some lawmakers and consumer groups demanded that the FDA expand its ban so that pigs and chickens cannot be fed cattle remains. They also want the FDA to close a loophole that allows dried cattle blood to be used as a protein supplement for young calves.

 

USDA investigators are trying to trace the source of feed given to the infected Holstein cow soon after she was born in 1997 in Alberta, Canada.

 

Contaminated feed was blamed for spreading mad cow disease throughout Britain in the 1980s and 1990s.

 

The American Feed Industry Association last week proposed strengthening the federal feed ban by opening plants to annual third-party inspections. Its plan would also require feed plants to register with the FDA and keep detailed records of their products for at least six years.

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