March 1, 2021
Soymeal futures in China decline because of swine disease concerns
Soymeal futures in China declined 5%, the sharpest drop in eight years on February 26, as investors took profit and new African swine fever (ASF) outbreaks in the country resulted in concerns over demand, Reuters reported.
The Dalian Commodity Exchange's most actively traded soymeal futures for May delivery was 4.86% down to RMB 3,485 (~US$539.57; RMB 1 = US$?) per tonne after four days of gains, with concerns that new swine disease cases could affect demand for the major livestock feed ingredient.
A manager with a meat producer in northern China, who was not permitted to speak to the media, said soymeal prices were rising because soybean cargoes would be limited in March, and people did not consider the ASF outbreaks to be severe. However, the manager said the market discovered that the disease was really bad after surveys were conducted in the industry.
Soybean crushers in China were projected to cut operations in March because of limited supplies as rains in Brazil hampered harvests and delayed shipments.
Wang Xiaoyang, senior analyst with Sinolink Futures, said investors took profit too which was normal.
Wang said there are signs ASF in China is spreading from the north to the south of the country.
Traders said China's domestic soymeal prices were also affected by declining Chicago soybean futures following lower United States export sales.
In early February, Reuters reported a rise in ASF outbreaks at China's northeast and northern provinces, affecting swine production as the country steadily rebuilds its swine herd.
Traders and analysts said hog futures instead increased on expectations of a supply crunch.
Pork prices in China are 30% lower so far in 2021 to their lowest since August 2019.