January 29, 2004
Soybean Prices Plummet As Feed Millers Cancel Soymeal Shipments
Feed millers are canceling shipments of soymeal as the bird flu hits the feed industry in Vietnam, Indonesia and Thailand.
In Thailand, the poultry sector accounts for about 55 percent of commercial feed consumption, while it is 35 percent in Vietnam and 80 percent in Indonesia. Poultry feed formulation needs about 20 percent soymeal and at least 50 percent corn.
As the outbreak spreads across Asia, soy and corn futures at the Chicago Board of Trade (CBOT) have also been hit, with corn falling to two-week lows and soybean to three-week lows on fears of reduced feed demand from Asia.
"Buyers are asking suppliers, including us, to cancel, defer or wash-out some Indian soymeal shipments," said one leading Singapore-based trader. "We have received requests from Vietnam, Thailand and Indonesia."
A wash-out is the sale of a cargo back to the supplier at a higher price.
Traders said they feared other nations hit by bird flu might also seek cancellations.
"We are keeping our fingers crossed. You never know. It's very difficult to estimate feed demand now," one trader said. Feed millers are showing no interest."