October 10, 2003

Soymeal Market in China Bullish after the Week-long National Day Holidays

An eFeedLink Exclusive Report

After the week-long China's National Day holidays, soymeal market in the country opened in a bullish mood, a carry-over of the successive price hikes since September.    
   
Currently, soymeal prices across different regions of China all went up, albeit by different extents. Prices ranged as follows:    

• Quoted prices in Dalian area hovered at RMB2400/ton, up by RMB100-130/ton from the end of September; 

• Market prices in most areas of Hebei province were at RMB2450/ton, grew by RMB100-180/ton from end September; 

• In Zhengzhou city of Henan province, quoted prices hovered at around RMB2500/ton, increased by RMB100/ton from end September;

   

• Ex-warehouse prices in Jiangsu region averaged between RMB2580-2590/ton, increased by RMB100/ton from end September;

   

• In Shandong province, quoted prices were between RMB2450-2480/ton, up by RMB50/ton from end September;

   

• In Zhejiang area, ex-warehouse prices kept to RMB2560-2580/ton, rose by RMB100/ton from end September; 

• In Chengdu city of Sichuan province, market prices kept close to RMB2630/ton, inched up by RMB80/ton from end September;

   

• In Guangdong area, ex-warehouse prices maintained at RMB2620/ton, increased by RMB90/ton from end September. 

According to market participants, reasons for soymeal market in China remaining bullish after the week-long holidays were as follows:                                                

• Firstly, soybean supply in China remained tight after the holidays. Meanwhile, there would be no imported soybean arriving between September 20 and mid November. Also, although locally produced soybean has been fully harvested, the product would only enter the market after a period of time due to its high water content when being harvested;  

• Secondly, higher purchase prices of soybean have created sustainable space for soymeal prices to rise. When the Shandong-produced soybean entered the market, prices in different regions started to shoot up in a rapid pace. This was mainly attributable to the heavy buying by spot buyers, soyoil producers, and futures traders. Current soybean purchase prices in the Northeast region closed at RMB2400-2500/ton;
              
• Thirdly, current demand for soymeal in China is still in its peak period with demand from feed millers seen on a continual increase. This is driven by the continual growth in aqua, poultry and livestock production, and thus the corresponding increase in feed consumption.  

Looking at the supply situation in China: Some soyoil factories could not function normally and some even called a halt to production, owing to the supply shortage of soybean. Currently, soyoil producers and distributors in Guangdong area have stopped issuing quoted prices. As they are uncertain about the approaching market situation, they are seen controlling their output, and do not accept orders for the time being. It was reported that one of the soyoil producers in Guangdong even raised quoted prices to RMB2680/ton.
 

On the other hand, feed millers generally adopted a wait-and-see attitude in procurement, as soymeal prices were increasing unabatedly and it was hard for the small to medium-sized feed mills to accept the ongoing high prices. Accordingly, there were only limited actual transactions of soymeal in China.
 

In other words, there is still sustainable room for China's soymeal prices to rise in the coming weeks, owing to tight supply of and strong demand for soybean. Continual bullish market for the near future is still possible, say market analysts.