U.S. Soybean Use Falls After End of Argentine Crisis

By Jeff Wilson

Aug. 14 (Bloomberg) -- Soybean demand from U.S. processors fell 6.7 percent last month after Argentina rescinded an export tax increase, ending a four-month dispute with farmers and reducing demand for U.S. vegetable oils and animal feed.

Users including Bunge Ltd. and Archer Daniels Midland Co. crushed 133 million bushels of soybeans last month, down from 142.5 million in July 2007, the National Oilseed Processors Association said today in a report. The average estimate of five analysts surveyed by Bloomberg News was for 140.3 million. About 133.5 million bushels were processed in June.

The Argentine farm crisis ended July 18, when President Cristina Fernandez de Kirchner rescinded her decree raising levies on exports of grains and oilseeds. The country is the world's biggest exporter of soybean oil and meal. Farmers fought the March increase for four months, blocking roads and withholding produce, boosting demand for U.S. supplies.

``Crushing slowed after the Argentina settlement,'' said Anne Frick, a senior oilseed analyst for Prudential Financial in New York. ``A few more plants were taking down time for regular maintenance.''

Soybean futures for November delivery rose the 70-cent limit allowed by the Chicago Board of Trade to close at $12.84 a bushel yesterday. The 5.8 percent gain was the biggest since January 2007. Most-active futures, which jumped 49 percent in the past year before today, reached a record $16.3675 on July 3.

Projected Use

U.S. processors will use 1.83 billion bushels of soybeans to make animal feed and cooking oil in the marketing year that ends Aug. 31, up from 1.808 billion last year, the U.S. Department of Agriculture said Aug. 12. Use may fall to 1.815 billion bushels next year, the department said.

Advance export orders of soybean-oil since Oct. 1 are 85 percent above year-ago levels on increased demand from China, the world's biggest buyer, USDA data show. Since Oct. 1, shipments of soybean meal, an animal feed, are up 7.9 percent from the same period a year earlier, the USDA data showed on July 31.

Slower demand helped reduce profit for oilseed processors at the end of July to 84 cents a bushel from $1.11 at the start of the month in the U.S., the world's largest soybean grower and exporter, Bloomberg data show.

Inventories Fall

Inventories of soybean oil at the end of June at NOPA- member processing plants fell 17 percent to 2.367 billion pounds from 2.835 billion pounds a year earlier, the association said. Analysts surveyed by Bloomberg expected 2.388 billion, on average. Stockpiles at the end of June were 2.449 billion pounds.

Soybean-oil futures for December delivery rose 2.5 cents, or 4.9 percent, to 53.28 cents a pound yesterday in Chicago. The price gained 45 percent in the past year before today, reaching a record 72.69 cents on March 4 on rising demand for biofuels and cooking oil.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net.