June 8, 2004

Chinese Soy Crushers Fail To Agree On Minimum Soymeal Price
 
A dozen or so mainly northern Chinese soybean crushers failed to reach a consensus on how to halt the slide in soymeal prices - including setting a minimum price - in meetings that began last week and concluded Monday, according to industry sources.
 
The crushers met last week to discuss setting a floor price of RMB2,900 per ton ($1=RMBY8.28) for soymeal to reverse a months-long trend of falling feed prices and demand in the wake of a deadly bird-flu outbreak in January. But soymeal prices nationwide continued to fall as the biggest industry player, East Ocean Grain and Oils Co., opted out of the move, selling soymeal at much lower prices.
 
"Almost all attendants agreed something should be done to prevent soymeal prices from falling further, but no consensus could be reached in terms of how," said a manager at a Shandong-based crusher who attended the meeting Monday.
 
The Zhangjiagang-based East Ocean has been selling soymeal at RMB2,600/ton since last week, with the possibility lowering its price to RMB2,300- RMB2,400, a manager there said.
 
"A price coalition missing the biggest industry player is doomed to fail; that's why the members had a hard time reaching an agreement in the latest meeting," said a Dalian-based industry analyst with a Chinese futures brokerage house.
 
Soymeal is the main product of crushing industry, and its price is a crucial component in determining profit margins.