Amadeusz Juskowiak

Falling soybean crush ratios cut output

The sharp decline in soybean crush ratios seen in the last few weeks accelerating in recent days has pushed margins below the cost of production at most soybean processing plants and prompted many to cut output of soybean meal and oil

The weekly US soybean crush rate was reported by the National Soybean Processors Association this afternoon at 2178 mln bushels down from the 22 mln bushel plus rate seen over the past two months when crush margins surged to the best levels seen in over a year

Active soymeal export loadings at the Gulf had pushed soybean futures and premiums higher prompting a pickup in the weekly crush number

However much of that export demand seems to have been met with most foreign meal users now waiting for the expected surge in shipments of new crop South American soymeal over the next few months

US processors are now finding domestic livestock feed demand is very light for this time of year due to the milder than normal winter so they steadily dropped offering prices in an attempt to find buying interest soyproduct dealers said

Soybean meal futures have also steadily declined in recent weeks setting a new contract low of 13970 dlrs per ton in the nearby March contract today

Many speculators down here bought March soymeal and sold May looking for no deliveries on first notice day tomorrow which would cause March to gain on deferreds one CBT crush trader said

But theyve been bailing out this week because the March has been acting like there will be a lot delivered if not tomorrow then later in the month he added

As a result of the weakness in soymeal the March crush ratio The value of soyproducts less the cost of the soybeans fell from the mid 30s earlier this month to 226 cents per bushel today dropping over five cents in just the last two days

The May crush ended today just over 17 cents so no processors will want to lock in a ratio at that unprofitable level the trader said Hopefully they will now start to cut back production to get supplies in line with demand he added

With futures down processors are finding they must bid premiums for cash soybeans further reducing crush margins

A central Illinois processor is only making about 30 cents for every bushel of soybeans crushed at current prices down sharply from levels just seen just a few weeks ago and below the average cost of production cash dealers said

Most soybean processing plants are still in operation with little talk of taking temporary downtime so far But processors will start halting production in the next few weeks it they continue to face unprofitable margins they added