April 29, 2009

Major international trading companies are nervously watching as soymeal sales stutter on the impact of swine flu, a chief trader at a major US soy exporter said Tuesday (April 28).

"Sales have stopped [for soymeal] and we'll have big problems if we can't move it," the trader told Dow Jones Newswires.

Companies such as Bunge Ltd. (BG), Archer Daniels Midland Co. (ADM) and Cargill Inc. have seen sales almost slump in recent days as buyers stopped purchasing soymeal used for animal feed. "They have stopped buying or are just buying hand-to-mouth," the trader said.

Brazil is a major world producer of soy, which get crushed into soymeal and sold, often as animal feed. Brazil is the No. 2 soy exporter behind the US and soy derivatives are an important part of Brazil's trade balance.

Steve Cachia, a grains analyst at brokerage firm Cerealpar, said a reduction in the consumption of pork could lead to a reduction in the demand for animal feed. This would hit soymeal.

But Cachia said it'll still too early to know the impact of the swine-flu outbreak on meal sales.

Cachia said Brazil exported 2.34 million tonnes of soymeal between January and March, up 12 percent from the same period a year ago.

He expects soymeal exports to remain steady in 2009 from around 12.2 million tonnes in 2008.

The swine flu has affected everything from soy prices to aviation stocks.

July soy closed down 14 cents at US$9.83 a bushel Tuesday on the Chicago Board of Trade, while July soymeal closed down US$2.30 at US$304 per short tonne.

Although commodity prices have been dropping, it's still too early to know the impact on animal feed prices, said Pedro de Camargo Neto, director of Abipecs, a pork industry association.

"We need to wait and see how this plays out," he said.