March 1, 2022


Soymeal futures in China reach a record high on tight bean supplies



Soymeal prices on China's Dalian Commodity Exchange rose to a record high even as the government plans to release soybeans from its reserves over concerns of tight supplies of the oilseed in the market, Reuters reported.


Soymeal futures increased 5% on the Dalian Commodity Exchange to reach CNY 4,064 (~US$643.13; CNY 1 = US$0.16) per tonne, 12% higher compared to the Lunar New Year holiday this year.


China did not give details on soybean volumes that would be released from its state reserves.


In Rizhao, Shandong province, soymeal cash prices increased to CNY 4,400 (~US$697.62) per tonne, CNY 250 (~US$39.64) higher than last week and the highest in nine years. The province is a major processing hub in eastern China.


Zou Honglin, an analyst with the agriculture division of Mysteel, a China-based commodity consultancy, said soybean crushers did not expect insufficient bean arrivals from South America to cover demand, and did not stock up inventory before the Lunar New Year holiday because of poor margins.


China's weekly soybean inventories was at 3.017 tonnes, 33.33% lower compared to the same time in 2021.


Mysteel data showed soybean meal inventories declined 47.43% compared to 2021 to 385,300 tonnes.


Analysts and traders said soybean supplies were so tight that key crushing facilities in Tianjin port, Guangdong province, have proposed plans to curb production in the past few weeks, which resulted in higher soymeal prices.


Major commodities firm Bunge closed in Tianjin plant in mid-February and will remain shut down until the end of March. The company will close its Nanjing plant this week until the middle of March for a planned yearly maintenance.


Crush margins in China turned negative at the end of last year, which curbed big soybean purchases. Soybean crushers have struggled to make profits as demand from the livestock industry remained flat. 


A China-based trader said the country should have received 5 million tonnes of soybean from Brazil in January 2022, but only 2 million tonnes were loaded. The remaining load was rolled over to February 2022 but ports have capacity issues so backlogs are a problem.


Rising soymeal prices will further cut margins for swine farmers.


The trader said some feed producers have replaced soymeal with alternatives. While there are shipments on its way to China, weak crushing margins have restricted big purchases which could have relieved the shortage.


-      Reuters

Video >

Follow Us