Soymeal for poultry feed the new gold

26-04-2012 | | |
Soymeal for poultry feed the new gold

With a South American drought dampening the harvest expectations, soybeans and soymeal, and consequently chicken feed, have become the target of speculation on par to that of crude oil or gold, the Wall Street Journal reports.

The intensity of the market has already driven soymeal futures and options volume up by 25%: the total futures market is now worth US$10 billion.

Argentina’s grain exchange cut its soybean production forecast by 3.1% to 43.1 tonnes. Argentina is the third largest producer of soybean after Brazil and the USA.

But with South American supplies expected to fall, the consumption of soybean is expected to rise; the USDA has forecasted that China’s animals will consume 46.5 million tonnes of soymeal (a 245 increase from previous years) this year, and that US livestock farmers will use more soymeal than in previous years.

Some forecasters have predicted US soymeal consumption will climb to 30.6 million tonnes, representing a 1.3% increase.  

The putative driver behind the demand is China’s growing middle class and the fact that soymeal has as yet no convenient substitute.

The increasing volatility of soymeal prices are making it difficult for chicken farmers to judge the best moment to buy grains for feed. 

Source: Wall Street Journal