Nearly two dozen of oilseed crushers in northern China have announced a suspension of their crushing operations between the last week of September and the second week of October because of a lack of soybeans.
These crushing facilities located in Shandong and Hebei provinces as well as Tianjin municipality have decided to shut for one to two weeks, according to three soybean meal traders in China.
For instance, four out of five major crushing facilities in Tianjin are to shut for at least a week. One of which will halt operations until the third week of October.
While in the port city of Rizhao in Shandong province, one crusher had already stopped operations between the second and third week of September, citing supply shortage. Three other crushers said they will shut during the second week of October.
One crusher particularly said it will shut for a month starting October 10 due to the lack of supply.
“Supply is tight in Shandong, but northern China is fine,” one trader commented.
Chinese purchases of soybean cargoes have been sliding since the first quarter of this year as crush margins have remained mostly negative and domestic demand was hurt by Covid lockdowns.
China booked nearly 10 million tons of March 2022 shipment of soybean cargoes, and the monthly volume hovered at 7-8 million tons for April-July shipments. However, China’s demand for August shipment slumped to just 6.5 million tons, the lowest since January this year.
The number for September shipment of soybean cargoes continued to fall to below 5 million tons, further tightening the supply of imported soybeans in China, according to trade contacts.
Falling soybean cargo arrivals in September have sent domestic soybean meal basis soaring. Basis for January delivery of soybean meal traded at 1,200 yuan/ton ($169/ton) over January DCE soybean meal futures which closed at 4,047 yuan/ton ($570/ton) on Friday.
In comparison, basis for the same delivery was trading at 600 yuan/ton ($85/ton) last month, meaning it doubled in September.
Meanwhile, the upcoming week-long public holiday in the first week of October also added bullishness to domestic prices as feed producers rushed to bolster their inventory level before holiday demand kicks in.