One major animal feed producer in southern China has snapped up huge volumes of soybean meal on Thursday shortly after reports said the water draft level in the US Mississippi River is at a “dangerous level”.
According to several traders in China, the publicly listed Guangdong Haid Group contracted 80,000-100,000 tons of soybean meal deliveries between October and December this year, making one of the biggest single-day trade in recent weeks.
Traded prices for spot delivery in October were heard at 5,160 yuan/ton ($728/ton), while November to December deliveries concluded at 4,699 yuan/ton ($663/ton).
The buying spree started after front soybean meal futures contract spiked in comparison to other contracts further down the curve as low water draft in the Mississippi River could cause delays of cargo shipment from the US Gulf region in the first half of October.
This could ultimately lead to a lower-than-expected soybean cargo arrivals into China in the fourth quarter of this year.
The pre-holiday rush of soybean meal purchases ended last week after feed producers sourced a large amount of spot deliveries in early and mid-September to prepare for the week-long holiday in the first week October.
Nevertheless, the purchases from Haid Group were mainly for deliveries in November and December this year, which implies a hedge against the risk of lower shipments from the US Gulf in October.
The voyage time from the US Gulf to China is about 45-50 days.
Haid Group’s shares on Shenzhen Stock Exchange fell 1.5% on Friday to 60.28 yuan per share ($8.5 per share).