"U.S. Meat Crisis Is Latest Blow for World’s Largest Crop Traders"

From Bloomberg:

The world’s largest agricultural commodities traders, already contending with the closure of restaurants, now have one more thing to worry about: the slowdown of American meat plants.

Lockdowns from New York to Los Angeles already meant people were eating more at home, hitting demand for cooking oil made from soybeans. Now shutdowns and slowdowns at American meat plants are forcing farmers to cull their animals, cutting the need for soy meal, a key ingredient in feed rations.

Bunge Ltd., the top processor of soybeans globally, has already slowed crushing operations in the U.S. by 10%, according to Chief Executive Officer Greg Heckman. Rival Archer-Daniels-Midland Co. reduced utilization rates of its factories in North America by 5 percentage points, the company said last week.

“We’ll run for margin and we’ll run the crush to meet demand,” Heckman said in an earnings call Wednesday. In the U.S., between maintenance and adjusting to demand, “we’ve cut crush almost 10%,” he said.

Soybean processing yields oil, which is used for cooking and biodiesel, as well as the meal that goes into animal feed. With both markets being upended by the novel coronavirus, profits from crushing the oilseed have already tumbled to their lowest level in about six months.

President Donald Trump recently ordered meat plants to stay open and Agriculture Secretary Sonny Perdue said facilities that previously closed should be up and running in 10 days. Still, many will operate at slower-than-usual rates for social distancing, meaning producers will continue to euthanize animals. As many as 7 million pigs are expected to be killed in the second quarter, according to CoBank, a lender to the agriculture industry....MORE