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Ag Ministry: Don't Worry, Soymeal Prices Will Come Down

Today, China's agriculture ministry told market participants not to worry about 20-to-30-percent increases in soybean meal prices discussed on this blog last week. A lengthy article on the ministry's market information website cited similar increases in soybean meal prices during April, but assured readers that prices will ease after the May 1 Labor Day holiday. The ag ministry did not mention lengthy inspections delaying customs clearance of soybeans that was the focus of feed industry articles cited by this blog last week. 

The ministry's article attributed the soybean meal price spike and widespread idling of processing plants to weather problems in Brazil that delayed arrivals of Brazilian soybeans. Lack of Brazilian soybeans disrupted the Chinese market's seasonal switchover from North American to South American supplies that normally happens in April. According to the ministry, soybean crushers' capacity utilization was only 30 percent in the first 2 weeks of April and 37 percent in the 3rd week. Soybean meal stocks were just 150,000 metric tons on April 18, just a third of stocks at this time last year.

The ag ministry says Chinese crushers have been preparing for uncertainty after Trump's election since last fall by stocking up on U.S. soybeans and locking in South American supplies. 

The ministry reported that China's grain reserve company, Sinograin, released 1.33 million metric tons of its stockpiled soybeans since April 16. The ministry expects 12 million metric tons of imported soybeans to arrive in May and 11 million metric tons to arrive in June, allowing crushers to resume operations and alleviate the short supply of soybean meal. 

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