- Posted by Eduardo Moreno
Crushing plants in China have shut down or are planning to suspend operations due to a soybean shortage, industry sources were reported as saying by AgriCensus.
Bunge has halted operations at its crushing plants in Tianjin for 49 days from 14 February to 3 April, according to sources, while the company’s plants in Nanjing have issued notices to shut down for almost one month from late February to March.
Shutdowns would also take place at Louis Dreyfus Company (LDC) operations in Tianjin and Cargill’s in Hebei Province, the 18 February report said.
According to a report by China’s industry consultancy Mysteel on 18 February, many crushing plants in China’s southern province – Guangxi – have plans to shut down this month.
China’s domestic crushing margins have dropped since the country returned from its week-long Lunar New Year holiday last month, according to analysis by AgriCensus.
Import costs for soybeans paid by Chinese crushers had climbed as weather concerns over the outcome of South American crops had boosted rising CBOT soybean futures and spot premiums in Brazil’s market, AgriCensus wrote.
Meanwhile, demand for soya meal has weakened due to the plunge of hog prices since mid-December 2021, according to the report.
Chinese buyers have had to slow down the rate of soybean purchases from global markets, according to trade information tracked by AgriCensus, particularly for crops in the current marketing year.
Some Chinese soybean processors had also cancelled orders for around 10 to 12 cargoes of Brazilian soybeans last month, the report said.
Slow importing and pre-holiday consumption had led to low domestic soybean stocks in recent weeks, AgriCensus wrote.
According to data from China’s National Grain and Oil Information Centre (CNGOIC), soybean stocks in mid-February totalled 3.95M tonnes, 1.5M tonnes lower than at the same point last year.
In Guangxi province, only two edible oil plants have soybean stocks while other plants have no stocks, according to Mysteel.
The market was probably waiting for China’s government to release soybeans from its reserves to ease the tight supply, a China-based trader told AgriCensus.
Source: Oils & Fats Internacional (OFI)