September 11, 2003
China's Soymeal Market Up On Tighter Supply Prospects In October
In the week ending Wednesday, Chinese domestic soymeal markets rallied broadly in eastern and southern China, supported by the prospect of tighter supplies of raw materials and strong seasonal demand in the coming month, traders and analysts in China told OsterDowJones Wednesday.
As of Wednesday, local crushers' soymeal prices in Jiangsu province, eastern China were quoted around 2,300 yuan ($1=CNY8.277) a metric ton, about CNY50 higher than the prices one week ago.
"The rally of soymeal in Jiangsu province has been related to the curbed crush operation in one crusher, located at Zhangjiagang, Jiangsu, who has now stopped to offer quotes as the crusher is lacking raw materials, after three cargoes of South American soybean bought by this crusher failed to unload at the ports in time," a trader from China National Cereals Oils and Foodstuff Import & Export Corp., or Cofco, told OsterDowJones Wednesday.
In Shandong, some large crushers also didn't provide quotes for soymeal as they are concerned about the supplies in the coming months, traders said.
In Guangdong province, the soymeal prices also firmed in the past week, gaining over CNY50-70 a ton and quoting as high as CNY2,320 a ton in some region, as local crushers are still waiting for import licenses to get their stranded cargoes unloaded in the near term.
STRANDED CARGOES AND SEASONAL DEMAND
"At least six cargoes of South American soybeans are still stranded at the port of Guangzhou and Shenzhen, waiting for the key import licenses from China General Administration of Quality Supervision, Inspection and Quarantine (known as AQSIQ)," a trader from a Hong Kong based oilseeds company said Wednesday.
AQSIQ has been handing out the key paper to local buyers, but at snail's speed in recent weeks, and the stranded cargoes in eastern and southern Chinese ports could get import licenses after Thursday's Moon Festival, traders said.
"It is possible that AQSIQ will issue some import licenses later this week, but the imbalance of import arrivals in different ports means that the local crushers in some region could face serious disruption of raw materials supply in the coming weeks, despite the unloading of imported cargoes," added the trader from the Hong Kong company.
The firmness of soymeal markets also has been contributed partly to the strong coverage of local feedstuff industry.
In September, the demand for soymeal usually shows seasonal strength. This year, as most market players are worried about October imports, they have been more actively involved in forward coverage, instead of buying from the hand to mouth, a third trader from a local soybean trading company in Harbin told OsterDowJones Wednesday.
In the past week, the feedstuff producers in eastern China have apparently increased their soymeal buying, traders said.