* Shrinking soybean stocks prompt meal supply worries
* South American meal imports possible amid lower prices
* Imported volumes likely small, prompt shipment key
By Karl Plume
CHICAGO, June 9 (Reuters) - Dwindling U.S. soybean stocks have raised concern that soymeal supplies needed for livestock and poultry feed could run short ahead of the new crop harvest, setting the stage for soymeal imports from South America.
But any imported amount will likely be minimal as U.S. processors should begin receiving freshly harvested soybeans from August and beyond, so domestically-sourced soymeal will become more plentiful and less expensive, trade sources said.
"The real squeeze is how fast it can get here," said one U.S. soymeal trader, noting the two- to three-week journey from Brazil to the United States via cargo ship.
"You lose your opportunity as soon as July goes off the board," he said, referring to the Chicago Board of Trade July soymeal futures contract, which expires on July 14.
July futures hit a 10-1/2 month high on Tuesday and closed at a $31.20 per ton premium to the August contract and a $73.50 premium to the new-crop October contract.
Traders have been anticipating word of soymeal imports over the past week as prices of soymeal from South America fell to a more than $40 per ton discount to U.S. soymeal prices.
"It's kind of a common theme this time of year. You get down toward the end of the (marketing) year in a short crop year and people start doing the mathematics," said Bill Nelson, analyst with Doane Advisory Services.
U.S. soymeal prices have been driven higher by concerns about shrinking old-crop soybean supplies.
U.S. old-crop soybean stocks are projected to shrink to 130 million bushels by the end of the current marketing year on Aug. 31, according to the latest U.S. Agriculture Department data.
Traders on average expect that estimate to shrink to 114 million bushels when USDA next updates its estimate early on Wednesday.
The U.S. soymeal supply has also narrowed amid a stronger export pace in the past two months. A drought-shortened soybean crop in Argentina has slowed soy processing in the world's top soymeal exporter and shifted more demand to the United States.
SOYMEAL IMPORTS
The most likely destination for any imported South American soymeal would be the U.S. East Coast, with eastern hog producers the most likely customers, traders said.
However, both the hog and poultry sectors are currently in the midst of a severe downturn and that may dampen feed demand, they said.
"The hog guys are the biggest users and they've got razor-thin margins at best. If they want to continue to feed their operations, they need cheaper meal, but at the same time they are thinking about cutting back overall anyway," said Gavin Maguire, director at Chicago brokerage EHedger.
U.S. hog production was projected to decline 2.6 percent in 2009 while poultry production was seen falling 3.8 percent from a year ago, according to the latest USDA projection.
The vast majority of U.S. soymeal demand is met by domestic soy processors, but a small amount is imported every year -- but the situation was exacerbated this year by strong exports of soybeans to China amid a crop failure in Argentina.
The U.S. Agriculture Department projected soymeal imports at 150,000 tonnes in the current marketing year ended Sept 30, up from 130,000 tonnes in each of the previous two years. (Reporting by Karl Plume; Editing by Marguerita Choy)