Chinese soymeal stocks below three-year average as demand rises

Chinese soymeal stocks have fallen below the three-year average, with crush facilities picking up after the return from New Year celebrations in response to hefty meal demand, data from the China National Grain & Oil Information Centre showed Thursday.

Stocks currently stand at 680,000 mt, down 40,000 mt from last week and less than half the 1.6 million mt it stood at in mid-January, data from CNGOIC shows.

Levels have now breached the three-year average of 720,000 mt, and are down 22% compared to this time last year.

Most Chinese crushers which shut for the Chinese New Year holiday period have now ramped up their production, reaching a sturdy weekly crush of 1.8 million mt.

That number is still down from the pre-New Year crush level of 1.9 million mt/week, when China was building up stock in anticipation of the holiday period, but remains at a strong level compared to earlier in the season when the weekly crush averaged around 1.5 million mt.

Soybean oil stock were reported at 1.4 million mt, down slightly from last week’s 1.43 million mt level, but up some 210,000 mt from the level this time last year.

Chinese crushers are incentivised to pick up their production even more as stocks tightens and demand for meal increases.

The Chinese government, however, kept its expectations for annual demand for soybeans for the 2017/18 season ending in September unchanged at 110.55 million mt, of which 96 million mt will have to be imported from overseas.

CNGOIC estimated the import cost at $457/mt CFR, up $39 from their last month’s price as the cut to Argentina's coming crop supports global prices, the CNGOIC said.

That price compares to Agricensus assessment of $453.50/mt CIF China on March 7.