Acute Spot Soyameal Tightness

The acute tightness in nearby soymeal availability in the UK looks set to continue a while yet with GBP317/tonne traded for first half April ex Liverpool today. That's around GBP40/tonne higher than what was being offered at the beginning of the month.

A glance down the shippers price lists at the moment sees more POA's than actual firm prices, as spot demand remains strong and the supply pipeline acutely tight.

One of the problems is that many consumers appear to have put themselves in an underbought position, in anticipation of a glut of cheap soymeal flooding in from South America.

Despite record production there, a combination of lack of farmer selling and bottlenecks at the ports is currently delaying arrivals in Europe by up to a month.

Nearby afloat vessels carrying Argentine hipro soya to Europe are quoted at USD424/tonne CIF today, whereas vessels only currently loading are offered at around USD366/tonne.

The situation looks set to get worse as Argentine dock workers flex their muscles by threatening widespread strike action, as they frequently do just as the soy and corn harvests kick off.

Strike action has already begun at the Quebraco terminal in the Argentine port of San Martin about 500 km north of Buenos Aires, and there are concerns that more ports will follow suit. In addition discontented truckers and farmers are now also threatening to follow suit.

Big crops, big prices is an old saying in the grain trade, and it certainly looks like applying to the current soymeal situation. A glance down one shipper's list today shows straight April hipro soya on the Humber priced at just shy of GBP75/tonne more than July.

This situation certainly looks like it is likely to continue at least through April and the into May - where domestic consumers here have substantially less cover on.

There's also been some spillover effect into the rapemeal market, which was looking quite weak earlier in the month, but has subsequently driven nearby prices back up again. We've also seen a pick up in summer and next winter activity on rapemeal, which has been priced at 50% - or even less in some cases - of the price of soymeal of late. Traditionally that is very much towards the low end of where we would expect rapemeal prices to be in relation to soya.