Soybean market goes crazy over ‘mad cow’ news

COLUMBUS – Europe’s regulatory reaction to control “mad cow” disease could benefit Ohio and Indiana soybean growers who have been enduring low grain prices, said Allan Lines, Ohio State agricultural economist.

In recent weeks, France, Italy and Greece – with Germany expected to follow – have banned meat and bone meal ingredients in all livestock feeds, as a precaution against the spread of “mad cow” disease through herds. For soymeal exporters, that’s an opportunity to sell more product as European farmers seek out plant-based sources of protein for livestock feeds, Lines said.

Soybean markets have reacted to the regulatory news with two strong upticks since mid-November, raising cash prices by 25 cents per bushel, to $4.80 per bushel, Lines said. If prices remain higher, they could beat the estimated average price of $4.65 per bushel for the 1999 harvested crop. Prices also are pushing into the upper level of the $4.40-$5 per bushel range that the USDA projects for the 2000 crop.

For the time being, price gains have probably topped off. But other increases could result from additional countries banning meat and bone ingredients from feeds, Lines said.

Two variables could temper enthusiasm of U.S. producers, Lines said. The first is European import restrictions on genetically modified crop varieties. The restrictions could limit trade with the United States, where farmers commonly grow GMO crops in the form of Roundup-Ready soybeans that resist certain herbicide applications.

In comparison, GMO varieties haven’t been approved in some countries of South America, which could be a source for European imports, Lines said.

The other big “if” is how Europe disposes of the meat and bone meal products it has banned, Lines said. Properly processed meat and bone meal can be safely fed to livestock, he said. Although Europe won’t use it, other countries needing a cheap protein source may use the cast-off products, which could reduce U.S. soymeal exports to those nations.

In all, Europe ranks second to Asia in terms of agricultural trade with the United States, Lines said. But soymeal would rank high on Europe’s list of feed sources because of the great amount produced in the world – particularly by the United States, which is expected to harvest a record 2.78 billion bushels.

Other plant sources of protein are rapeseed and sunflower, minor players in the feed meal markets.

Actual U.S. soymeal exports have been running about 17 percent below last year, while the USDA has projected only a 2 percent annual decline. Up to now, European bans have been the only event to excite U.S. soybean markets, which were suffering from burdensome supplies as indicated by a 13 percent stocks-to-use ratio.

Soybean production is estimated at 260.4 million bushels in Indiana and 193.2 million bushels in Ohio, both production increases in the two states from a year ago. Per-acre soybean yields are estimated at 46 bushels in Indiana and 44 bushels in Ohio.

Mad cow disease is a brain-wasting disease known as bovine spongiform encephalopathy in livestock. In human beings BSE takes the form of new variant Creutzfeld-Jakob disease, that ultimately results in death. Humans are believed to become afflicted when they consume BSE-infected meat.

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