Soybean Meal Prices Fall, Profits Slip, China's Soybean Imports Slow

Since the start of last week, soybean meal prices in Dalian, China have fallen 6.7%. This has pushed crushing margins into negative territory, ending the largely profitable pattern seen since early September. Soybean meal prices could be very weak early next year, and the pace of China's soybean imports will slow.

Soybean Meal Prices Fall, Profits Slip, China's Soybean Imports Slow

The fall in Chinese soybean meal prices threatens to disrupt the booming pattern of US soybean imports, as crushing profits start to turn negative. Since early September, profits at domestic crushing plants have mostly stayed positive.

Fat soybean crushing profits, combined with CBOT soybean futures at a four-year low, had spurred Chinese buyers to snap up US soybean cargoes for November-December shipment at a frenzied pace last month. But expectations of huge arrivals have hammered soybean meal prices, dragging down crushing profits.

China accounts for more than 60% of global soybean trade.

A slowdown in China's soybean imports will weigh on global prices. Spurred by strong demand, global soybean prices had risen to a four-month high earlier this month.

China has undoubtedly overdone it, and there are plenty of soybean cargoes on their way to China. said a trading manager at a company in Singapore.

The fall in soybean meal prices in the Chinese market will result in crushing profits of zero, or even losses.

Since the start of last week, soybean meal prices in Dalian, China have fallen 6.7%. This has pushed crushing margins into negative territory, ending the largely profitable pattern seen since early September.

At the end of last year, encouraged by rising crushing margins, Chinese importers overbought soybeans. But record-high import volumes, combined with falling soybean meal demand after an avian influenza outbreak, caused multiple defaults.

Traders say that despite falling prices and huge arrivals, China's current situation has not yet reached last year's level.

From November to January next year, China's soybean imports are expected to reach about 21 million tonnes, but even so, traders are faintly seeing signs of a slowdown in imports early next year.

Normally, China's monthly soybean imports are 5.5-6 million tonnes.

An analyst at Tianxia Liangcang Grain, Oil and Feed Network said: If soybean prices are at 9.00 USD/bushel, then profits may still be decent. But below that level, and with Chicago soybean prices continuing to rise, profits will turn negative.

Soybean meal prices could be very weak early next year. he said.

Another Singapore trader said that this week, the FOB price of US Gulf soybeans for December shipment carried a premium of 127 cents over the CBOT January soybean contract, down from 205 cents two months earlier, suggesting slowing demand.