Demand for soy-derived ingredients continues to enjoy strong growth on the back of rising consumer demand for health-promoting food products but ingredients suppliers have seen margins squeezed on the back of soy bean prices hitting 15-year highs over the past year.
Some relief has been felt in past weeks as estimates for the global stocks rose. The September WASDE (World Agricultural Supply and Demand Estimates) released by the US government reported that soy stocks should rise significantly this year on the back of improved harvests.
But media reports this week estimate that $5 billion worth of US grain and oilseeds was in fields awaiting harvest when Hurricane Ivan made its landfall. At risk are significant quantities of corn and soybeans.
The American Soybean Association reports that shipping vessels that were at the berth were moved to the middle of the Mississippi river and ride out the storm. "Luckily, there are not many soybeans moving down river at this time. Although, the week of September 10 showed export inspections were as strong as they have been since March, at more than 10.5 million bushels (286,000 tonnes)," said the ASA.
Price rises for ingredients suppliers will also be felt through knock on rises attributed to soaring freight costs. According to the ASA, barge freight rates from nearly all locations on the inland river system jumped to record levels last week due to Hurricane Ivan.
"The rate from Memphis to New Orleans jumped to an all time high of 535 per cent of tariff".
Before Hurricane Ivan, earlier this month WASDE estimated an increase in global soybean stocks - by 1.3m mt for end of 04/05, pushing the global socks-to-use ratio up by 2 days to 90 days.
Investment bank Goldman Sachs had warned at the same time that current prices do not adequately reflect the 'low level of US inventories or the potential for an early freeze' that could lead to a drop in the US crop. "We believe there is upside price opportunity at current levels,"said the bank.