BEIJING: Soybean processors in China, operating deep in the red for the last six months, have seen losses sharply reduced lately on expectations of tighter soy supplies as the US-China trade war intensifies.
Crushers in the country's eastern province of Shandong, a major hub for soybean processing, are losing about 22 yuan a tonne, this week.
That's significantly narrower than losses of 215 yuan a tonne in the week of May 10, and much better news for crushers than losses of 450 yuan a tonne at the end of last year, the worst in seven years, on dismal domestic demand for animal feed and higher supplies.
"Expectations of a prolonged trade war are driving meal prices higher in China which has improved margins," said one trader at an international company which owns crushing plants in China. He declined to be identified as he was not authorised to speak to media.
Soymeal futures traded on China's Dalian exchange have climbed 9 percent in three weeks of gains.
The latest round of Chinese and US trade talks on May 10 ended in a stalemate and the US President Donald Trump sharply increased tariffs on $200 billion worth of Chinese goods.
China, by far the world's biggest soybean importer, has been taking mainly Brazilian beans since the start of the trade war last year.
At official at one crusher based in one of China's southern provinces said demand for poultry feed was strong.
"Crush margins have turned good recently, as domestic soymeal prices have jumped a lot," said the official, who declined to be identified as he was not authorised to speak to media.
"Demand from poultry feed is great and seems it has offset a big part of the loss from pig feed due to African swine fever."
The incurable pig disease has spread across China in recent months, with more than 120 outbreaks having been reported in all of its mainland provinces and regions, as well as Hainan island and Hong Kong.
That has reduced demand from pig farmers for feed ingredient soymeal.
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