- Price of Chinese soymeal increased due to the delay in the US cargo carrying soybean.
- Prices in Guangdong, one of China’s largest pork consuming regions, have risen up to 60% since march.
- Hog farmers are also looking for alternate Protein source as they have reduced the amount of soymeal in the feeds.
Ships carrying up to three million tonnes of US soybeans due to arrive this month and in November are expected to be delayed by 15 to 20 days, according to two soybean traders.
Tight Supply
While cargo delays in the United States are expected to weigh on Chicago soybean futures, tight soymeal supplies will boost Chinese hog prices.
Prices in Guangdong, one of China’s largest pork-consuming regions, hit one-and-a-half year highs this week and have risen nearly 60% since March.
“China’s soymeal supply is very tight right now, and it’s getting worse with late U.S. cargoes,” said one Singapore-based trader at an international trading firm that owns soybean crushing plants in China.
“Soymeal prices will remain high as this tight supply situation will continue until the end of the year,” the trader added.
Finding alternatives
According to the US Department of Agriculture, China will ship an estimated 98 million tonnes of the oilseed in 2022/23, which is crushed to make cooking oil and protein-rice raw material for animal feed soymeal.
“Hog farmers are looking for alternative protein sources as they have reduced the amount of soymeal in feed,” said a second Singapore-based trader. “This will support pork prices.”
Increasing demand
China’s consumer prices rose to 29-month highs in September, fueled primarily by rising pork prices.
Higher hog prices have also increased demand for more pigs to be raised to larger weights, increasing demand for animal feed.
Low water-level
This year’s low water level in the Mississippi River has hampered the transport of grains, fertiliser, and other commodities along the vital waterway.
According to USDA data released on Monday, US soybean exports are trailing their normal autumn pace despite rising supplies from an accelerating harvest, as low river levels have slowed the flow of grain barges to export terminals.
To avoid groundings in drought-stricken waterways, shippers have reduced barge tows by nearly 40% and reduced the amount of grain loaded in each barge. Meanwhile, the Army Corps of Engineers is dredging sections of the Mississippi and Ohio rivers to widen shipping channels.
Global trade Scenario
“Chinese buyers did not cover their requirements for enough beans in July, August, and September,” said a Beijing-based trader with an international trading firm.
“Because the price was very high, they were hesitant to take beans and only covered 80% of the shipments. Then there was the Mississippi River issue. Cargoes scheduled to be loaded in October will be delayed until November.”
In Dongguan, Guangdong province, soymeal cash prices reached a record high of 5,680 yuan per tonne last week, up from 3,500 yuan ($486.6) at this time last year.
China’s soybean imports are expected to fall to a two-year low this month, following drops in September and August.
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Source: Reuters
