China Soybean Meal Price Spike Due to Lengthy Border Inspections

Chinese soybean meal prices are spiraling upward as customs inspectors closely scrutinize every shipment of imported soybeans. Soaring prices for the important source of protein crimp the operations of animal feed manufacturers and livestock producers in China.

China's Feed Industry Information Net reports that the inspection time for soybean cargo ships has grown from the customary 5 days to more than 20 days. Inspections are taking 30 days or more at major ports Tianjin, Qingdao, and Rizhao where ships are lined up waiting to unload cargos. Delays in unloading ships has shrunk the available supply of soybeans for Chinese crushers, in turn reducing the volume of soybean meal available to meet demands from feed mills and livestock producers. 

According to the report, tighter inspections were initially spurred by customs inspectors' discoveries of chemical contaminants and pests in shipments of soybeans arriving from Brazil last June. Last year China suspended shipments from 5 companies for 2 months. 

Then, on March 4 of this year Chinese authorities announced suspension of U.S. soybean shipments from 3 companies due to claims that customs agents discovered mycotoxins and seed coatings in shipments. The announcement was made in conjunction with retaliatory tariff announcements. The Feed Information Net report said the rigorous inspections are linked to tariffs and an across-the-board tightening of policies.

China's customs officials are screening soybeans for seed coating agent residues, ergot, weed seeds and other items. Importers are required to submit additional documentation showing fumigation reports, certificates of origin, port loading and unloading records, and in-transit temperature monitoring data. This month sampling has been switched from one out of five ships to batch-by-batch inspection of entire vessels, the report said. 

A second Feed Industry Information Net article reported that commercial inventories of soybean meal have been shrinking for the last four weeks. The article listed 16 soybean crushing plants that have suspended operations and are not expected to resume processing soybeans until after the week-long May 1 holiday. The idle plants are at ports from Panjin in northeast China to Shanghai and Zhejiang Province in the south and include Chinese private and state-owned companies as well as multinationals.

Feed Industry Information Net reported an average cash price of 3500 yuan per metric ton for 43% protein soybean meal, up 330 yuan from the previous low point. The price is highest in northeastern region at 4200-to-4270 yuan and lowest in Guangdong at 3450-to-3620 yuan. 

MySteel, a second agricultural market information site, reported steep increases in average soybean meal prices from April 2 to April 23 of 940 yuan in Tianjin (up 30%), 680 yuan in Shandong (up 22%), 760 yuan in Jiangsu (up25%), and 790 yuan in Guangdong (up 27%). 

Price quotes shown on mysteel agricultural commodities web site.

Chinese buyers have slacked off on purchases of U.S. soybeans and the peak season for U.S. bean shipments is winding down. Last week USDA inspections of soybeans bound for China were less than 70,000 metric tons, down from 135,000 metric tons the previous week. Chinese buyers have been purchasing from Brazil since January, but large quantities will not arrive until next month.