February 23, 2004

China Soybean Crushing Up As Margins Improve
 
Soybean crushing in China moved closer to normal levels as margins improved following the easing of bird flu concerns this week, industry sources said.
 
Soymeal prices in Jiangsu, eastern China surged to RMB 2,900 a metric ton, compared with RMB 2,740/ton a week ago. In other regions of China, soymeal markets gained around RMB 120-200/ton in the past week, traders said. 

China government announced a new policy to support the faltering poultry industry over the past weekend and the public is also less concerned about the bird flu, said a trader from China National Cereals Oils and Foodstuff Import & Export Corp, or COFCO said Friday.
 
The partly resumption of poultry products export to a number of foreign nations, including South Korea and Singapore, also lead to immediate demand for feed ingredient.
 
Feed ingredients markets, including soymeal, fishmeal and even feed wheat, all strengthened in the past week, a reflection of the improvement of demand from poultry and livestock industry. More crushers in China are now returning to normal crush operations, encouraged by the signs of improvement of demand, traders said.
 
The large crushers in eastern China are now making money from processing soybeans, after being in the red since late 2003.
 
China soymeal markets are likely to have shaken out of the seasonal weakness and could stay firm in the coming months, added traders in China.
 
"The overall crushing margin for imported soybean is now positive, after the sharp rise of soymeal and relatively firm soyoil prices," a trader from a Hong Kong-based oilseeds company said Friday. He didn't give specific estimates for the present crushing margin, saying that it depends on the cost of imported soybeans.
 
In the coming weeks, more crushers are expected to return to operation to meet the rise of demand, and the soymeal markets are expected to stay strong in the coming month.
 
"The pent-up demand from end users, low pipeline stock , reduced crusher operation, and soaring high cost of imported soybeans, all pointed to a higher soymeal markets," said a grain market analyst in Beijing.