Soybean meal prices in China hit record high amid tight supply

Soybean meal spot prices in China hit its highest level at Yuan 5,500/mt on average Sept. 26, up by 8% week on week, amid lower availability in the domestic market, sources said.

As CFR China soybean prices surged to a record high in March 2022, the Chinese crushers lowered the purchase volumes of imported soybeans for June shipment and onwards to minimize losses from deteriorating negative crush margins. Soybean meal prices were last higher at Yuan 5,150/mt on March 22.

According to industry sources, the demand for June to August 2022 shipments were only at 20 million mt, down by about 10% compared to same period last year. Subsequently, the arrival volume of imported soybeans during the third quarter of 2022 has dropped. The total import volume of soybeans in July and August 2022 was at 15.04 million mt, down by 5.6% compared to same period last year. As a result, many crushing plants have started experiencing shortage in soybeans this month, leading to lower crushing volume and declining soybean meal inventories.

Meanwhile, as the long holiday for National Day Celebration in China approaches, demands for hog prices continue to support hog raising margin which was at Yuan 800/mt last week. Downstream feed sectors are willing to purchase more soybean meal for feed usage and stockpiling during festival seasons. As a result, the growing demand has pushed prices higher during the recent weeks.

"It was heard that the spot soybean meal price has surged to Yuan 6,100/mt in Xinjiang Province, and spot prices remain at high levels in north-east regions of China," a Chinese crusher said.

The replacement crush margin was around Yuan 450/mt as of Sept. 23, up 50% compared to two weeks ago, market sources said.

"The replacement crush margin would remain positive as soybean meal prices will be supported until November when the arrival volume of imported soybeans is expected to increase as crushers have purchased higher volumes of soybeans for September shipment and onwards," a Chinese trader said.

However, buyers are concerned about the depreciation of Chinese yuan against the US dollar. "The depreciation of Chinese yuan has eroded potential gains on the crush margin, discouraging crushers to purchase more for spot shipment," another Chinese crusher said.