Soymeal prices rise on weather

Soybean meal prices in China rose as much as 4 percent, the biggest fluctuation of any commodity market today, on concern unusually dry weather may reduce crops in Brazil, the world's second biggest grower of soybeans.

China is the world's second-largest user of soybean meal, which is processed from soybeans and used to feed livestock. China buys mainly from the U.S., Brazil and Argentina to meet about half of its annual demand for the beans.

Rio Grande do Sul, Brazil's third-largest soybean-growing state, got insufficient rains over the weekend on farms already dried out from below-normal moisture since December, said Francisco de Assis Diniz, a meteorologist for Agriculture Ministry in Brasilia yesterday. The drought is spreading to neighboring states and no increase in rainfall is expected before March 21, Diniz said.

"Soybean production at home is limited so we would have to look elsewhere for supplies as soybean oil and soybean meal demand is increasing every year," said Tu Weidong, a trader at Shenzhen-based China International Futures Brokerage Co., the biggest trader on the Dalian Commodity Exchange in 2004. "The weather in South America is causing U.S. prices to go higher."

The price of soybean meal, which is processed from soybeans and used to feed livestock and poultry, gained a third day this week by a total of 10 percent on the Dalian Commodity Exchange.

Source: China Daily