Negative crush margin slows China’s soybean demand: sources

New Delhi — China’s demand for soybeans has slowed down in recent days amid prolonged negative net crush margins, market sources said March 3.

Crushers in China, the world’s largest soybean and pork consumer, have been reluctant to purchase beans shipments as demand for soymeal-based animal feed has plummeted after the Lunar New Year celebrations, sources said.

For the 2020-21 marketing year (October 2020-September 2021), China Soybean Gross Crush margin for April shipment was assessed at $8.06/mt March 2, compared with the pre-holiday level of $20.75/mt Feb. 10, according to S&P Global Platts data.

“There is no point in purchasing the oilseed when gross crush margin is less than $20/mt,” a China-based crusher said.

Most analysts viewed the current slowness in soybean demand among China-based crushers as a seasonal trend.

Typically, pig herd in China reduces significantly after the Lunar New Year holidays as a substantial number of hogs is slaughtered to fulfill enormous pork demand every year.

Although the public holidays last for seven days starting Feb. 11 in China, the slackening soybean demand generally persists for a few weeks after the Lunar New Year holidays.

As of March 3, most China-based crushers had enormous soybean meal inventories, which they stocked up well before the Lunar New Year holidays, sources said. Under those circumstances, soybean demand is likely to remain subdued in coming weeks.

Notwithstanding the current slowness in beans purchasing, China’s long-term demand outlook for soybeans was seen spiking to record levels.

China is expected to import an all-time high 100 million mt and 110 million mt of soybeans in the 2020-21 and 2021-22 marketing years, respectively, as the country’s swine herd is likely to fully recover from the African swine fever epidemic by the first half of 2021, S&P Global Platts Analytics said.

S&P Global

Tags: China, soybeans, crush margin, negative margin