March 9, 2004

China Soymeal Prices Up In Anticipation Of Seasonal Demand

Soybean crushers in China raised soymeal offers in anticipation of seasonal demand from the feedstuff industry, traders in China said on Monday.
 
The ex-factory prices of soymeal in eastern China, quoted by large crushers using imported soybeans, ranged from RMB3,200 to RMB3,250 ($1=RMB8.277) a metric ton, compared with RMB3,100-3,130/ton one week ago.
 
"There is little downside room for soymeal, due to the high cost of raw materials, as well as uncertainty about the arrivals of South American soybeans in April and May," a trader from a soybean trading company in Heilongjiang, northeastern China said.
 
On Monday, prices of imported soybeans at most ports jumped by RMB80- 100/ton, boosted by concerns over dwindling stocks until South American soybeans hit the markets.
 
Prices of imported soybeans arriving shortly could increase, due to the strong rally of Chicago Board of Trade soybean futures since mid-February.
 
Imported soybeans in Shandong, one of the major consuming regions, were quoted as high as RMB3,730/ton.
 
"The crushers are now in a quagmire. They couldn't lower soymeal prices, because of higher prices and fewer arrivals of imported soybeans until May," a trader from China National Cereals Oils and Foodstuff Import & Export Corp., or Cofco said.
 
But soybean processors cannot raise the prices of soymeal too fast, in order to avoid irritating the struggling livestock and poultry industry.
 
Last October, the rise of soymeal prices, followed by a broad rally in grain and edible oils markets, incurred government intervention, traders said.
 
"Last fall, Beijing sent a team to investigate the soymeal market rally, after local livestock industry called for government intervention. Soymeal markets crashed in the following days. I guess no crusher wants to repeat it this year," said the first trader.
 
Despite their generally low soymeal stocks, the feedstuff producers are reluctant to actively increase the forward coverage, because the poultry industry still bleeds from the relatively low prices of poultry products, traders added.