China soymeal prices hit record levels on tight bean supply

Soymeal prices in China, the world’s top consumer of the animal feed ingredient, are at record highs as rising demand from farmers follows months of lackluster soybean imports.

The surge in spot prices to an average of 5,352 yuan ($747.94)per tonne on Friday could curb enthusiasm for expanding hog herds, supporting hog prices that have already rallied about 40% this summer.

China’s soybean crushers, who turn beans into protein-rich meals to feed animals and into oil for cooking, have scaled back purchases of soybeans in recent months due to high global prices and poor demand from the livestock industry.

Soybean imports in August were down 25% from a year earlier, and arrivals in the first eight months of 2022 were down 8.6%.

Some plants, especially in north-east China, have halted operations due to a shortage of beans, said a Beijing-based soybean trader.

But with fast-rising hog prices boosting demand for feed, soymeal supply has tightened, significantly ahead of the week-long National Day holiday that begins Oct. 1, when feed mills typically buy extra stocks.

“The market is running out of soybean meal,” said Yuan Song, chief analyst at trading firm Juxing Agriculture Group.

Soymeal stocks have fallen for ten consecutive weeks to 493,000 tonnes in the week ending Sept. 17, well below the five-year average of 845,000 tonnes, according to Shanghai JC Intelligence Co Ltd (JCI).

Cash soymeal prices rose by more than 100 yuan daily for several days last week, reaching as much as 5,600 yuan a tonne in northwestern China’s Xi’an city JCI-SBM-XIAN on Friday, according to JCI.

Current prices are higher than a previous peak of 5,218 yuan in March when Russia’s invasion of Ukraine roiled global grain markets and around 40% higher than a year ago when power rationing forced some plants to shut down.

However, prices are likely to remain high in the coming months, with soybean arrivals staying at low levels of around 6 million tonnes this month and next, according to JCI.

Source: Nasdaq

To read the full original article, please go to: https://www.nasdaq.com/articles/china-soymeal-prices-hit-record-levels-on-tight-bean-supply

Sharing is caring!