US Soymeal Prices Hit 5-Month Low

US soymeal prices fell to their lowest levels since last October in overnight eCBOT trade Thursday. Front month March CBOT soymeal closed on the session low of USD264/tonne, just eclipsing the low of the year so far set on Feb 4th of USD265.60/tonne.

The March future is now within spitting distance of the previous harvest low of USD262/tonne set in early October 2009. The lifetime contract low was USD235/tonne set in the traditional "spring break" or "John Deere low" in March 2009.

Despite meal eclipsing the previous 2010 low of Feb 4th, March soybean prices are still almost 50 cents higher than their lowest levels of the year, set on the same day.

There are a couple of reasons for the disparity.

The ever increasing use of corn by the US ethanol industry has led to record production of DDGS looking for a home. Soymeal is now have to price itself into feed rations in the US more aggressively than it has in the past faced with this new competition.

Additionally, talk that an extension of the USD1 a gallon blenders credit getting passed as early as this week, is seen as bullish for beans and oil but bearish meal. Without the credit crush margins for producing soyoil for inclusion in biodiesel are poor, but with it we could see increased crushing and therefore extra production of meal.

For more background info on the blenders credit element of this story see here.

Of course the pound was some 9 cents or so higher against the dollar back in early February, which explains why UK soymeal prices aren't also currently at their lowest levels of the year.