The warning last week from Keith Collins, the US department of Agriculture's chief economist, that 2003-04 soybean ending stocks is 'something we've been struggling with' presses the necessity for the US soybean crushers to pace output, an action that will hurt the bottom line already starting to feel the squeeze.
According to the American Soybean Association, while Collins said it is possible that the US could go below USDA's 3.4 million tonne carryover estimate, "for right now, based on historical relationships of what the market needs to carry out for working stocks, we are using 125 million bushels [3.4 million tonnes]."
In order to achieve the adjustments needed, Collins claims it requires the US "export pace to slow down" as well as the domestic crushing pace, "because we've been running at very high levels at both and we would run out of soybeans," he warned.
Last week we reported a more optimistic message, suggesting that the price of soy ingredients could ease in the next twelve months for manufacturers and processors following predictions from the US government that farmers, on the back of rising soybean prices, will plant more soybeans for the 2004-05 marketing year.
Soybean planting for 2004-05 is expected to reach the record level of 30.1 million hectares, up from last year's 29.7 million hectares because farmers are expecting strong prices to continue, said the US department of agriculture, "With relatively high soybean prices heading into planting season, prospects appear good for increased soybean planting in 2004," said the USDA. The more recent comments from the department's chief economist now cast a cloud over these earlier predictions.
Companies likely to feel the impact of crop shortages include the world's largest soy processor Bunge and private giant Cargill.
But companies supplying soy derived ingredients are enjoying a buoyant market as consumer demand for soy-based products keeps on rising in parallel to an increased awareness of the potential health benefits that soybeans, and their derivatives, can hold.
Market analysts the Freedonia group predict that by 2007 US demand for soy products will rise by nearly five per cent each year to €6.7billion ($8.5 bn). In Europe soyfood sales are currently soaring with consumption of soya-based drinks and desserts up by over 20 per cent in 2002, valued at €1.3 billion ($1.6mn), say authors Prosoy.