September 1, 2003



More China Soybean Crushers Resume Operation As Margins Improve


More soybean crushers in China are gearing up to resume operations after idling their mills for several months, to take advantage of improving crush margins, traders and analysts said Monday.


Crush margins on imported soybeans in most parts of China were in the range of 40-90 yuan ($1=CNY8.2647) a metric ton, up CNY10/ton from margins about a week ago, traders said.


Highest margins were found in Eastern China, amid firm soybean product prices and lower cost of raw materials there, but margins are bound to fall again if crushers move too fast to resume operations," a trader from a Hong Kong-based oilseeds company said Monday.


Soybean supply in China has significantly improved after more stranded imported cargoes got approval to unload in the past weeks, leading to lower soybean prices across the nation, traders said.


The recent auction in Harbin, Heilongjiang province, also helped some local crushers in Northeastern China to resume the crush operations, traders said.


"Crushers in Southern China are just eager to rake in fat profit. Increased supplies in the pipeline are the main reason. The holiday (season) is around the corner. Prospects of higher consumption in the coming weeks lured crushers to gear up their production line. People just brushed aside worries about (likely) supply (shortages) in the coming quarter," a Shanghai - based trader from China National Cereals Oils and Foodstuff Import & Export Corp said.


China will celebrate the traditional Moon Festival Sept. 11 followed by a week-long national holiday starting Oct. 1, during which demand for cooking oils and meat usually goes up.


Talk that China may issue new interim safety certificates for import of Genetically Modified Organism, or GMO crops also helped relieve the immediate concern over possible disruption of soybean supplies in late September and October, traders said.


"We believe China will soon issue the new interim GMO safety certificates, possibly this week or next week. While there is much uncertainty regarding imports in the coming months, right now, we are not much concerned as crushers just have to rush to get the best of the improved crush margins," the trader from the Hong Kong-based company said.
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