October 27, 2003



China's Soybean Crushers Reaping Fat Margins In Past Week


Chinese soybean crushers are reaping fat crush margins as long as they can maintain their operations, traders in China said Friday.


"The crush margin is very good, as the soybeans crushed were bought before the sharp rally of soybean complex markets. But unfortunately, very few crushers have the luck to have ample supplies," a trader from a Hong Kong- based oilseeds company said Friday.


For processing a metric ton of imported soybeans, crush margins could range between 500-900 yuan ($1=CNY8.277), depending on the varied cost of imports, said traders.


The cost of imported soybeans, bought as early as this spring, were about CNY2,600-2,640/ton. Soymeal in eastern China was offered at CNY2,900/ton, after hitting highs of 3,050-3,100 early this week.


Crush margins for locally produced soybeans were about CNY400-500/ton, added the traders.


"This week, some crushers lowered their offer of soymeal, under the pressure of possible government intervention into the grain and oils markets," a trader from a soybean trading house in Harbin, Heilongjiang said Friday.


The softness of soymeal, however, could prove to be only a flash in the pan, as the government has little to resort to in order to improve the supplies, despite rumors of releasing soyoil stocks from state reserve into the markets.


"I doubt if China government will decide to sell the state-owned oil stocks into markets, as they might face the risking of buying back at a much higher level, as long as the CBOT (Chicago Board of Trade) soybean complex remains strong," the trader from the Hong Kong-based company said.


In the coming week, China is expected to receive five or six cargoes of imported soybeans, most of them from U.S., and at least three of these cargoes have been awarded the import licenses, traders said.


"These cargoes will arrive at southern China and will alleviate the tightness of soybean supply there. But after that, the earliest arrivals of foreign soybeans could be in late November. How could we expect the soy products markets to fall much when crushers are still hungry for raw materials?" an official from a crusher located in northern China said Friday.
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