March 12, 2021


Soymeal futures in China slumped following African swine fever resurgence concerns


Soymeal futures in China's Dalian Commodity Exchange slumped following concerns of an African swine fever (ASF) resurgence may affect demand for the key livestock feed ingredient over the coming months, Reuters reported.


The most actively traded soymeal futures on the exchange was 4.3% lower at RMB 3,176 (~US$488.78; RMB 1 = US$0.15) per tonne, closing 3.56% lower. This was the biggest drop per day in more than two years.


The slump follows increased market concerns that ASF and other swine diseases have affected China's breeding herd in the past three months and may get worse.


Wayne Johnson, a Beijing-based Enable Ag-Tech Consulting veterinarian, said swine diseases have peaked during winter, and may remain.


Simon Quilty, a livestock analyst, said in conference held in early March that between 7 million to 8 millions sows were culled since January.


Wang Xiaoyang, an analyst with Sinolink Futures, said the market projects ASF will spread to southern China.


Following China's rebuilding of its massive swine herd, soymeal futures hit record highs in mid-January. But new concerns of declining demand have overridden earlier supply concerns, as delayed Brazilian soybean imports have resulted in some crushers considering cutting production.


A manager with a crusher based in northern China told Reuters that poor demand could offset some of the impact from the delayed shipments, adding that meal stocks were increasing.


He said stocks have built up ahead of the Spring Festival holiday in February, so it is normal for demand to decline.


Wang said soyoil prices are strong, and soybean crushers are intending to maintain high operation rates to profit from the edible oil, leading to higher soymeal stocks.


China's Ministry of Agriculture and Rural Affairs has only reported six ASF cases this year, with four cases in January.


Darin Friedrichs, senior analyst at StoneX, said the geographical spread of the reported ASF cases is a bad sign. ASF has been detected from Guangdong, to Hubei and Sichuan.


Yongyi Consulting projects sow herds have declined every month since December, with estimates of 4.99% lower in January and down 4.68% further in February.


Farm managers said breeding herd losses will only affect swine production from May.


The most active hog futures contract in China, set for delivery in September closed 3.2% higher at RMB 28,595 (~US$ 4,404) per tonne.

- Reuters