September 29, 2003



China's Soymeal Market Weekly Report: Soymeal Prices in Most Areas of China Continued to Rise Significantly


An eFeedLink Exclusive Report


Soymeal prices in most areas of continued to rise significantly for the week ended September 26, due to a shortage of inventories and strong demand; with only a few areas registered a fall in prices.

Prices of medium grade soymeal as at September 26 were as follows: 

    • Ex-warehouse prices in Heilongjiang province varied between falling RMB10/ton to rising RMB70/ton from the previous week to RMB2130-2230/ton;
    • Ex-warehouse prices in Jilin province's Changchun city rose RMB80/ton from the previous week to RMB2300/ton; 
    • Average ex-warehouse prices in Liaoning province's Dalian city and Dalian port rose RMB50/ton from the previous week to RMB2300/ton and RMB2330/ton respectively;
    • Ex-warehouse prices in the Jingjin and Shijiazhuang regions rose RMB70-100/ton from the previous week to RMB2350-2400/ton;
    • Ex-warehouse prices in the Shandong region rose RMB40-60/ton from the previous week to RMB2360-2380;
    • Ex-warehouse prices in the Henan province rose RMB70-110/ton from the previous week to RMB2410-2450/ton;
    • Ex-warehouse prices in the Jiangsu and Zhejiang regions rose RMB120-140/ton from the previous week to RMB2480-2500/ton;
    • Delivered-to-factory prices in the Shanghai region rose RMB110/ton from the previous week to RMB2500/ton;
    • Delivered-to-factory prices in Hubei and Hunan provinces rose RMB20/ton from the previous week to RMB2420/ton;
    • Delivered-to-factory prices in central Sichuan province rose RMB30/ton from the previous week to RMB2450/ton;
    • Delivery prices at Fujian ports rose RMB20/ton from the previous week to RMB2400/ton;
    • Delivery prices at Guangdong ports rose RMB50/ton from the previous week to RMB2500/ton;
    • Delivery prices at Guangxi ports rose RMB90/ton from the previous week to RMB2540/ton. 

Recently, frost has already begun to descent onto a few areas in certain parts of Heilongjiang area, with lowest temperature dropping below freezing point; temperature in areas where frost has not appeared have also dropped to a low level. Once frost appears in an area, the soybeans there would stop growing, thus hurting the growth of late-ripening soybeans. The starting prices of early-ripen soybeans from Heilongjiang area, which have entered the market, are generally on the high side.


However, traders feel that the recent starting prices are not representative of the movement of soybean prices later, when large quantities of the product enter the market. There are substantial soybeans presently gathering in the northeast regions, but feed millers are more careful in acquiring high-priced soybeans, with most of them adopting a wait-and-see attitude.          


According to the latest circular by the Customs Directorate, China imported 2.4544 million tons of soybeans for the month of August; total soybean imports from January to August reached 14.722 million tons. Soyoil imports in August were 245,000 tons, while total soyoil imports from January to August reached 909,000 tons. Based on estimates by the relevant departments, total soybean imports by China would reach 19 million tons this year, which is an increase of 7.69 million tons or 68% versus the same period last year. Total volume of soybeans imported into China this year would remain very high.


However, the fate of imported soybeans has not been smooth, with many companies purchasing large quantities of imported soybeans earlier this year, due to concerns that there would be a shortfall of raw material later. Although some vessels could discharge their cargo after the government decided to issue a large number of Quality Inspection Certificates, with the recent rapid entry of locally produced new soybeans into the market, the government could once again control the number of Quality Inspection Certificates to be issued. There have been reports that the volumes of imported soybean stored at the various ports in the country are rising again.


As the locally produced new soybeans have not entered the market in large quantities, and the prices of imported soybeans are high and their volume is small, feed millers are worrying about the possible further price hikes. Although there have been no signs recently that China's soyoil factories are facing shortage of supplies, they have exercised a certain degree of control on the volume of soymeal taken out of factories. This caused the prices of soymeal in most areas to continue to rise significantly.


In addition, the shortage of Dalian soymeal is still acute.  Although the various contracts involving Dalian soymeal continued to fluctuate on the higher end of the price range, not rising and not falling either, the fact that Contract 311 for Dalian soymeal continued to remain on a high of RMB2438/ton. This has been an obstacle to the fall of soymeal prices. Dalian soybean even hit RMB2800/ton. There have been much resistance to the increase of soymeal prices, but market prices continued to remain high.


Overall, soymeal prices in China have already reached a certain high point, compared to historical prices. There is a need for price adjustments in both the futures and current markets. With the increasing volume of locally produced new soybeans and imported soybeans arriving at the ports, soymeal production in China would gradually increase.


Furthermore, the consumption of soymeal is expected to drop after the Mid-Autumn Festival (which fell in September) and China's National Day holidays, these could hurt the prices of soymeal in the near future. As a result, pressure on price adjustments is gaining strenghth in the nearby term.


Nevertheless, the biggest factor contributing to the uncertainty of soymeal prices would be the acute shortage of Dalian soymeal. If this shortfall continues, it would affect the prices of the current stock of soymeal in China. Besides, the fact that the volume of soybeans produced by China this year has yet to be determined will help limit the room for China's soymeal prices to fall in the short term.