BLBG: Soybeans Fall as U.S. Livestock Producers Balk at Highest Prices in a Year
Soybeans fell for a second straight day, paring this week’s gain, on speculation that U.S. livestock producers will curb purchases of soy-based livestock feed.
The profit margin for processors on the January futures contract has fallen 27 percent since Sept. 1, based on the cost of a bushel of soybeans crushed to make feed and cooking oil. Soybeans surged last week to a 16-month high of more than $12 a bushel. The cash-market hog prices has fallen 18 percent in seven weeks.
“Twelve-dollar soybeans don’t make a profit for hog producers,” said Mike Zuzolo, the president of Global Commodity Analytics & Consulting in Lafayette, Indiana. “Processor demand should slow down next month.”
Soybean futures for January delivery fell 1.5 cents, or 0.1 percent, to close at $12.115 a bushel at 1:15 p.m. on the Chicago Board of Trade. Yesterday, the price reached $12.35, the highest level for a most-active contract since June 5, 2009.
For the week, the commodity advanced 1.3 percent, the third straight gain, on rising Chinese demand for U.S. supplies.
In the week ended Oct. 14, U.S. soybean sales surged 85 percent to 2.02 million metric tons from a week earlier, the Department of Agriculture said yesterday. About 72 percent of that total was to China. Since then, exporters reported sales of 1.38 million tons to China and unknown destinations, the agency said. The U.S. is the world’s biggest grower and exporter.
“China is buying U.S. soybeans at a record pace, and that probably won’t slow,” said Joseph Vaclavik, a commodity broker at Advantage Traders Group LLC in Chicago.
Chinese profit margins on crushing soybeans have surge 79 percent in past year as livestock-feed demand rose, according to data from Shanghai JC Intelligence Co.
“Chinese processors are making too much money to slow imports,” Vaclavik said.
The soybean crop in the U.S. was valued at $31.8 billion last year, second only to corn at $48.6 billion, government figures show.
To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.
