March 29 2004

China's Soybean Crush Operations Pick Up On Improved Margins

More soybean crushers in China resumed operations in the past few weeks, but general crush operations remain low, given the uncertainty of South American soybean arrivals, traders and analysts in Beijing said on Friday.
 
The sharp soymeal rally recently lured more crushers to restart their operation lines, added the traders.
 
The ex-factory prices of soymeal quoted by a large crusher in Jiangsu province, eastern China, rose by RMB400 ($1=RMB8.277) a metric ton in the past two weeks, to RMB3,700/ton Friday.
 
The lower-than-usual crush in February and March, along with recovered demand from livestock and poultry industry helped crushers raise soymeal offers sharply in late March.
 
Soymeal, a product of the soybean crush, is widely used as the main source of protein in the feed industry.
 
In northeastern China, the top soybean-producing region in China, crushers are more active because of the relatively lower cost of raw materials.
 
As of Friday, prices of locally produced soybeans in northeastern China is roughly RMB500-600/ton lower than imported soybean prices at the ports in eastern China.
 
"The current crush operation is estimated to be around 60% to 65% of the normal crush level, compared with less than 50% in February," a trader from China National Cereals Oils and Foodstuff Import & Export Corp., or Cofco, said Friday.
 
In the October 2003-September 2004 marketing year, China's soybean crush usage is expected to hit a record 30.25 million tons, or an average of 2.52 million tons each month.
 
Stocks of imported soybeans are falling at an accelerated speed, as more crushers resumed operation.
 
In late March, imported soybean stocks in China are expected to be 600,000 to 700,000 tons lower versus early March, largely due to higher crush usage, traders said.
 
The concerns about tight supplies of soybeans in April, however, made some crushers hesitant to restart their operations.
 
"The prices of imported soybeans are also at multi-year high level, and many crushers with soybeans supplies are still operating at a reduced level so as to boost the soymeal prices and get a good margin," another trader from a Hong Kong-based oilseeds company said Friday.
 
Crushers in eastern China could make a better profit if they used soybeans bought and priced before the Chicago Board of Trade soybeans roared to $10.00 a bushel recently.
 
Soybean supplies are expected to further tighten in the coming month, as the total arrivals of imported soybeans in March and April are expected to barely reach 2.00 million tons, even less than half of the imports in the same period in 2003, said the trader from Hong Kong.