China urges tighter scrutiny as ASF cases jump
China’s Ministry of Agriculture and Rural Affairs said the spread of African swine fever (ASF) is on the rise and that prevention, control and supervision need to be tightened.
Outbreaks of the virus have been continuously reported across the country and the epidemic situation is “complicated and severe”, the ministry noted.ASF could worsen in the winter as cold temperature tends to bring greater difficulty to clean and sanitize hog facilities and trucks.
Despite rising cases of ASF in China, the most recent officially reported case in China was in April 2021. The outbreak was identified in the northern Chinese province of Inner Mongolia.
The lack of official reports has made it more difficult for the market to assess the location and severity of new outbreaks.
ASF has been one of the major events that rattled China’s animal feed and meat market in recent year. It led to the culling of millions of hogs in China in 2018, causing feed demand and subsequently soybean and corn demand to slump.
Live hog futures closed down 3.1% today on the Dalian exchange.
China soybean purchases persist despite Omicron threat, margins steady
Chinese importers continued to buy soybean cargoes from the US and Brazil Wednesday night at expensive prices despite growing global concerns about the Omicron variant.
One crusher contracted a January 2022 cargo of US soybeans from the Gulf at 104 c/bu over January CBOT soybean futures on FOB basis. Another international crusher in China bought a December/January shipment of Brazilian 2020/21 old crop soybeans at 305 c/bu over the same futures on CFR China basis. But some traders deemed the price too high.
Moreover, one first-half January 2022 shipment of US beans from the Gulf changed hands at 105 c/bu over January CBOT futures on FOB basis between two trading houses.Meanwhile, crush margins in China remained mostly steady day on day and Dalian soymeal and soy oil futures traded sideways.
In China’s domestic soymeal market, pre-holiday stockpiling has kicked off in some areas in the southwestern part of the country due to an earlier-than-usual Chinese New Year holiday and snowy weather which slowed logistics.
But overall, soymeal traded volume across the country was said to be steady on the day, according to three China-based trade sources.
Domestic soymeal premiums in northern China remained strong at about CNY180/ton above January DCE soymeal futures contract.
Chinese province hints new way for stockpiling to shun price volatility
The province of Guangdong in southern China is considering a new management approach for grain reserves in the province to avoid strong price volatility and save costs, the government said on Tuesday.
The provincial government of Guangdong announced several measures on December 1 setting times for rotation of grains in the government stockpiles.
This would mean the storage time of grains in a stockpile would be capped at four months before being rotated out of the stocks, although the storage time can be allowed to extend once by an additional two months. Facilities can also choose a self-managed rotation strategy but still must meet inventory and quality standards.
China’s national and provincial government have been making efforts in recent years to improve the grain storage system.
China previously had a temporary corn reserve mechanism that involves buying up domestic corn at ever-rising minimum guaranteed prices which led to the temporary reserve ballooning in size and in turn forced government-owned corn to be stored in outsourced private facilities.
Some of these private facilities reported deteriorating quality of stored grains while some even sold the grain illegally and falsely reported the volume due to poor management and scrutiny.
In August 2020, a video showing mouldy and damaged corn leaving a reserve warehouse went viral in China, prompting the government to send an investigation team. Against this backdrop, both the national and provincial governments are aiming to improve management and oversight of grain reserves.
China border closure shuts coal shipments, but grains unaffected
China’s northern border with Mongolia was said to have been shut due to the recent surge of covid-19 cases in the Chinese province of Inner Mongolia, sources told Sitonia Consulting.
Although rail shipments of coal from Russia to China have been disrupted, China’s grain supply was said to be largely immune to the border closure as only a portion of China’s grain imports come from Russia by rail.
The Chinese Ministry of Commerce addressed the issue of the global surge of the new covid Omicron variant and said “they will closely follow changes in the situation” and “assess the impact on China’s foreign trade and the global supply chain”.
Inner Mongolia is one of the northern provinces in China that has been hit by a new wave of covid outbreaks with 185 cases reported in the past four days.