December 29, 2003



China Soymeal Up; Soybean Crush Margins To Improve


Chinese soybean crushers have raised prices of soybean meal sharply, after struggling with shrinking crushing margins since mid-December, local traders in China said Monday.


Soybean crush margins are the difference between the prices of soymeal and soyoil and the cost of soybeans.


With higher soymeal prices, crush margins for imported soybeans will improve significantly in the coming weeks. Margins are currently hovering in a range of 30-50 yuan ($1=CNY8.28) a metric ton, compared with CNY90-CNY140/ton in mid-December, a trader from a Hong Kong-based oilseeds company said.


Crushers in eastern China raised soymeal offers to CNY2,800/ton Monday, about CNY150/ton higher than prices Friday.


But until Monday, local soymeal markets have been trending down since mid- December, as feedstuff processors were eyeing lower soymeal prices and weren't so active making forward coverage, said traders.


As of Friday, soymeal prices in eastern China were CNY60-CNY80/ton lower compared with prices in mid-December.


"Now with the surge in Chicago prices, the situation is about to change dramatically. More end users are likely to increase forward coverage now," said a trader from China National Cereals, Oils & Foodstuffs Import & Export Corp., or Cofco, referring to soy prices on the Chicago Board of Trade.


CBOT soymeal futures surged to new contract highs Friday on hopes for higher soymeal demand following the discovery of bovine spongiform encephalopathy, or BSE, commonly known as mad cow disease, in Washington state.


U.S. traders expect all animal-protein feed to be banned for use as U.S. livestock feed after the BSE case, which will boost the usage of soymeal in feed.


As Chinese soymeal prices are likely to stay firm in the coming weeks, buoyed by a stronger CBOT and expected higher demand from local Chinese users, Chinese crushers should enjoy better crush margins in January, traders said.

Video >

Follow Us