Soybean Meal

Soybean meal prices, basis Chicago futures, trended slowly higher in the first half of 2002 starting from about $150/ton to $170 by mid-year. Longer-term supply concerns, prompted in part by the strength in oil, triggered a mid-summer rally that carried futures to $205, the highest level since the late 1990's. The strength, however, prove short lived and by yearend, prices had fallen back to about $165, not much higher than year-end 2001 levels.

Global supply/demand for soybean meal during the past decade shows steady growth and the trend is expected to persist owing largely to the expansion in world poultry numbers. Soybean meal, a high protein feed used in formulating livestock and poultry rations is obtained from the processing (crush) of soybeans and is the world's major protein meal with about two-thirds of total meal production Cottonseed and rapeseed meal account for a combined total of less than 20%. The U.S. is the largest producer followed by Brazil and Argentina whose combined total about equals U.S. production.

World soybean meal production in the late l990's averaged less than 100 million metric tons. In 2002/03 a record large 130 million metric tons were produced, of which the U.S. produced a near record 35.8 million tons vs. 36.6 million in 2001/02. Brazil's production reached a high of 21.9 million tons vs. 19.5 million in 2001/02 while Argentina's record production of 17.8 million tons compares with 16.2 million, respectively. Part of the growth in meal production has been indirectly derived from the strong worldwide demand for vegetable oils, but the primary reason is that more countries have increasing livestock numbers and a burgeoning need for high protein feed; a fact underscored by the sharp expansion in the world's soybean meal trade with much of the recent gains emanating from developing nations in Latin America and Asia.

World soybean meal consumption in 2002/03 of a record large 129.6 million tons compares with 124.3 million in 2001/02 and less than 100 million as recently as 1997/98. The U.S. is the largest single consumer with about 30 million tons annually in recent years, but collectively the European Union and especially Asia have closed the gap with 29 million and 36 million tons, respectively. In 2002/03 Asia's record use reflects the expansion in the region's poultry production. China's 2002/03 consumption of a record 16.9 million tons compares with an annual average of about 10.5 million tons in the late 1990's. Despite China's surging demand, imports have dropped, totaling less than 100,000 tons in 2002/03 vs. a record large 4.2 million in 1997/98: early in the 1990's, China was a net exporter of soybean meal. France in 2002/03 was the largest single importer with 4.7 million tons, about 10% of the world total trade. Exports are dominated by Argentina and Brazil with a combined record large 31 million tons in 2002/03 out of 46.9 million ton total. World carryover at the end of the 2002/03 season is forecast at 4.6 million tons, marginally higher than both initial estimates and the year earlier total of 4.4 million tons; as usual, Brazil account for at least a quarter of the carryover.

U.S. soybean meal production (October-September) in 2002/03 of a near record 39.5 million short tons compares with 40.3 million in 2001/02. Total 2002/03 supplies of 40 million tons compares with 40.8 million in 2001/02, including a small carry-in at the start of each crop year of about 300,000 tons. Total supplies a decade earlier averaged near 30 million tons, but domestic usage has since climbed steadily and forecast at a record high 33.5 million tons in 2002/03 vs. 33.1 million in 2001/02 owing to increases in poultry production. Poultry demand now effectively controls the U.S. soybean crush, and not the soybean oil factor. Cattle accounts for little soybean meal use, hogs somewhat more.

U.S. soybean meal exports in 2002/03 were forecast to total only 6.2 million short tons vs. 7.5 million in 2001/021 and a record large 9.3 million in 1997/98; the decline in 2002/03 reflecting smaller demand from China and the European Union coupled with increased foreign competition from Brazil and Argentina.

U.S. soybean meal wholesale prices, basis 44%--hi-protein, Decatur, Illinois, in 2001/02 averaged $167.72 per short ton vs. $173.62 in 200/01 and the 1992-2001 average of $191 per ton. Rotterdam and Brazilian prices tend to average higher than prices. During 2002/03, domestic meal U.S. prices may be pressured somewhat if processors crush more aggressively for oil which in turn increases meal output.

Futures Markets

Soybean meal futures and options are traded on the Chicago Board of Trade (CBOT).

Excerpted from the CRB Commodity Yearbook. For more information on CRB products click here

Soybean Meal

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