KANSAS CITY — Soybean meal futures reached a record high Friday, July 20, when August futures at the Chicago Board of Trade touched $552 a ton before falling back to settle at $543 a ton, still a gain of $68.90 on the week.

Prices turned lower this week on profit-taking and some rain in the forecast, but soymeal futures experienced an unprecedented bull run as the nation’s midsection fell further and further into drought. Ideas persist that prices have not peaked.

Despite declining the $20-a-ton limit on Monday on broad profit-taking in the soy complex, soymeal futures continue to have upside potential, Matt Beeson, president of Beeson and Associates, Louisville, Ky., told Milling and Baking News. He said export demand from China likely would stay strong, regardless of prices, and the drought has staying power, even if it were to be mitigated somewhat by rain.

The U.S. Department of Agriculture released the latest Crop Progress report Monday showing that more of the soybean crop is rated very poor to poor (35%) than is classified good to excellent (31%). In the previous week, 34% was rated good to excellent and 30% was very poor to poor, the U.S.D.A. said.

Declining crop conditions have created a scenario of tight supplies, predictions of lackluster export demand and a need for livestock producers to take drastic action to remain profitable as feed costs soar, said Brian Harris, vice-president of Minneapolis-based Global Risk Management. In his view, once soybean meal crossed the $500-a-ton level, U.S. soymeal became less attractive to exporters and pressure built to start thinning herds of cattle because feeding them was prohibitively expensive, he said.

Soybeans are at a stage of their development where rainfall could still be beneficial. As a result, Mr. Harris said, a fierce weather market has developed where traders are checking meteorologists three times a day. Hints of some beneficial rains in the Northern Midwest led prices lower for a second consecutive session this week, along with concerns about the European economy and declines in crude oil.

Despite those bearish factors, overall market sentiment remains committed to buying on dips because there is too much uncertainty about the new crop, Mr. Harris said. Mr. Beeson said that, between now and October, prices would find a peak where widespread rationing of supply would kick in. The problem: only 20/20 hindsight would be able to clearly discern when that high point has occurred, he said.

“The market will peak out when everyone’s sure it can’t go any higher,” he said, adding that he doesn’t have a price level in mind where that eureka moment will occur, and he doesn’t encourage buyers to try to guess the peak either.

He said export demand from China, in the end, is not likely to be that price sensitive because he believes there is little in the way of an alternative since the most recent South American soybean crop was short.

He added that livestock producers are also somewhat constrained in what they can feed their animals because they must offer rations with appropriate levels of nutrients and protein. What is likely to happen if profit margins are eliminated is liquidation of some of their herds and flocks, he said. There is anecdotal evidence that some reductions have been taking place, but no firm evidence of any meaningful reductions yet.

Mr. Beeson said warning signs of a market top likely would be a decline of a few percentage points in the overall census of chickens, pigs or head of cattle, all of which consume large quantities of soybean meal. Part of the equation, he added, would be the condition of fall pastures — which right now are not looking good — and the condition of the winter wheat crop and how much of it will likely be fed to animals. He noted that feed sellers keep close to the vest the exact formulations they use to make their feed.

Mr. Harris said the disappointing 2012 South American soybean crop means that the gestating U.S. crop will come into a market that is already in tight supply. Currently, the sharp run-up in soybean meal prices is squeezing margins of livestock, poultry and swine producers, he said. With corn and soybean prices so high, they are starting to complain that too much corn is being diverted to make ethanol, said Mr. Harris.

Trying to influence Washington in their favor has so far been “like banging your head against a wall,” he added, especially in an election year.