WASHINGTON -- A soybean shortage could push prices a bit higher this summer for consumer items ranging from baby food to frozen desserts.
Poor rainfall and attacks by sap-sucking aphids last year have driven inventories down to their lowest level in more than three decades.
"We are destined to, some would call it, run out of soybeans at our current usage rate," said Purdue University agricultural economist Chris Hurt. "We cannot continue to use them at the rate we are."
In August, the nation could be "down to stuff being delivered at that moment," said Paul Aho of Storrs, Conn., an agricultural economic analyst.
America could squeak by, satisfying its needs for food and livestock feeds, the experts say. But it would have "the absolute minimum working stocks," said Keith Collins, the Agriculture Department's chief economist.
Shoppers might not see a big impact, but livestock producers may have to absorb record higher costs, said Steve Meyer, president of Paragon Economics of Des Moines, Iowa, an economic consultant to the hog industry.
demand for meat is strong, however, due in part to the popularity of Atkins-style high-protein diets. Daniel A. Sumner, professor of agricultural and resource economics at the University of California, Davis, expected some of the higher feed costs to be passed along to consumers.
Although consumers might not realize it, soybean oil or meal are important ingredients of many processed foods, everything from frozen desserts and coffee whiteners to baby food and salad dressings. Sometimes it's the main ingredient, such as tofu. More often it's a filler, such as in milkshakes, snack foods, baked goods and hamburger extender.
Commodities are such a small part of the cost of those products that consumers should see at most low single-digit increases in prices, Sumner said.
The United States grew 2.4 billion bushels of soybeans in 2003, 12 percent below the 2002 production, said Mark Ash, an oilseeds economist with the Agriculture Department. Just when soybeans most needed moisture, the rains failed last year in key growing areas of the Midwest. Aphid attacks made the problems worse.
Buyers have been drawing down the short supplies. Simultaneously, domestic and overseas demand has been strong, partly because major export competitors in South America also had short crops and shipment snarls during their own growing season, which is in the Northern Hemisphere winter.
As a result, only about 37 percent of last fall's U.S. harvest was left in inventory as of March 1 to carry America through to the next harvest, which starts in August, Hurt said. That's the lowest level since 1973. In an ordinary year, about 48 percent of the harvest would still be available in March.
The market can stretch supplies in the time-honored way: push up prices. There is a 40 percent chance that a bushel of soybeans will beat the record of $12.90 set in June of 1973, Hurt said. Aho predicted the price could reach $15 per bushel. Recent prices have been above $10 a bushel.
High prices would be good for farmers who still have soybeans to sell, said farmer Ron Heck, of Perry, Iowa, president of the American Soybean Association. But "it's just a fact that market prices go high when farmers don't have any left," he said.
It's bad news for users such as livestock producers. Animal feed takes most of America's soybeans, with poultry and hogs the leading users.
Prudent animal producers saw the price-supply crunch coming and locked in feed deals, said Aho, who works in the poultry industry. Those who haven't "may be in trouble this summer," he said. Collins said some producers might turn to corn gluten, a byproduct of ethanol production.
The United States also might import soybean meal or oil from South America, but Meyer cautioned that won't be easy. The United States is the world's leading soybean exporter, and U.S. ports are set up to export. Only a few Southern ports can handle imports efficiently, he said.
Raw soybeans probably would not be imported from South America for fear of bringing in soybean rust, a fast-spreading fungus in Brazil that could devastate U.S. crops. Importing meal would be safer because heating involved in processing it kills the fungus.
If the next harvest is good, the soybean crunch will ease, the experts say.
On the Net:
USDA Crop Report: http://www.ers.usda.gov/publications/waobr/view.asp?f wasde-bb
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