(Image: REUTERS/Jorge Adorno)
A Archer-Daniels-Midland Co (ADM) is shutting down its only food processing plant military in Iowa for weeks amid a record U.S. harvest, the grain trader told Reuters, restricting supplies of soybean meal for animal feed.
The temporary closure eliminates a market for farmers to sell their soybeans as low crop prices reduce income, and removes a source of livestock feed for buyers in the U.S. and abroad. Expectations about the shutdown helped push soybean meal prices at the Gulf export terminal to their highest level in a decade.
ADM's Des Moines facility will be closed for maintenance from mid-October to November, the company said in response to a Reuters inquiry this week.
“We anticipated this project and have plans in place to ensure we can meet customers’ needs during this time.”
The facility in America's No. 2 soybean state crushes about 5 million bushels of soybeans per month on average, brokers said. That number would represent about 12% of Iowa's monthly soybean crush, according to U.S. government data.
“It’s a strange situation,” Don Roose, president of Iowa-based US Commodities, said of the harvest shutdown. “Some people are afraid: what if I don’t start operating again?”
ADM did not comment on the reason for the closure, but agreed to upgrade the plant this year to address alleged air quality violations under a 2023 consent decree with the Iowa Department of Natural Resources. In August, firefighters were called to the scene for a fire that was extinguished in about an hour, according to local news.
The U.S. soybean crushing sector has expanded in recent years as processors opened new plants to capitalize on growing demand for vegetable oils from renewable fuel producers. The facilities crush soybeans to produce oil and meal, an important source of protein in animal feed.
Despite the additional capacity, monthly soybean crushing fell to a near three-year low in August as several U.S. facilities were idled for seasonal maintenance and repairs ahead of the big harvest.
The extension of the downtime surprised traders and contributed to a soybean meal deficit at a time when traders had already struck deals for U.S. domestic and export sales based on misguided expectations of stronger production, officials said. brokers.
“Trade anticipated the new crushing capacity coming online and didn’t hold back when the consumer called,” said Kent Woods of CrushTraders, an analytics firm. “Then came delays in new crushing capacity compared to expectations.”
Chicago Board of Trade's October soybean meal futures rose to three-month highs this week as exporters scramble to cover sales commitments.
Physical market bid prices for immediate shipments of soybean meal at the US Gulf export terminal rose to 10-year highs.
Hurricane Helene prompted ADM to close another crushing facility in Valdosta, Georgia, on Monday, according to the facility's website.