Bloomberg News

U.S. Seen Facing Soybean-Oil Shortage as Shipments Accelerate

December 04, 2012

The U.S. faces a shortage of soybean oil after exports accelerated in recent weeks following a drop in South American production, Oil World said.

U.S. soybean-oil exports in the 2012-13 season begun Sept. 1 may total 850,000 metric tons, up from 664,000 tons a year earlier, the Hamburg-based researcher said today in an e-mailed report. About 72 percent of this year’s expected total is already sold, against commitments at the end of November ranging from 18 percent to 51 percent in the past five years. On Nov. 9, the U.S. Department of Agriculture pegged national exports of the oil at 544,000 tons this season.

“Unusually large sales of U.S. soya oil have occurred in the second half of November,” Oil World said. Known U.S. export commitments are “already more than most observers had expected to be shipped in the full season. However, soya oil exports from Argentina and Brazil will be unusually low at least until February 2013, requiring U.S. exports to step in to satisfy world demand.”

The oil, used in biofuel and cooking, is produced along with meal fed to livestock when raw soybeans are crushed in processing plants. Soybean futures are up 21 percent this year on the Chicago Board of Trade and touched a record $17.89 a bushel on Sept. 4 after drought in the U.S. followed dry weather in South America last season. Soybean oil is down 4.1 percent this year, in part as lower U.S. and South American supplies were offset by ample availability of Asian palm oil.

Chinese Buying

Still, soybean-oil futures have climbed 8.1 percent since reaching a two-year low on Nov. 12 as U.S. exports accelerated. China, the world’s biggest soybean consumer, purchased 130,000 tons of the oil from the U.S. since the marketing year began, compared with none a year earlier, USDA data show.

U.S. soybean-oil production may drop to 8.455 million tons this season from last year’s 8.922 million tons, Oil World said. The USDA estimates domestic production at 8.087 million tons, after drought cut the harvest. Domestic usage for biodiesel may drop to 2 million tons, compared with 2.209 million tons last year, the researcher estimated.

“Declining soya oil production will most likely lead to a supply shortage in the domestic market,” Oil World said. This “will result in a lower-than-expected availability for biodiesel usage of soybean oil in 2012-13.”

Soybean crushing in Argentina fell to 2.41 million tons in October, 27 percent less than a year earlier, as farmer sales to processors slowed amid tight supplies, Oil World said. A shortage in Brazil has brought soybean exports “almost to a standstill and is partly forcing crushers to take downtime,” according to the report.

To contact the reporter on this story: Whitney McFerron in London at wmcferron1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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