Chinese soya interest wanes as CBOT hits new highs

Chinese buyers have retreated to the sidelines as a rally in Chicago soya futures to fresh multiyear highs has undermined their hopes for restored crushing margins following recent rises in domestic meal prices.
CBOT soya futures hit fresh highs during Asian trading hours on Wednesday on concerns over supply from Brazil, the world's number two producer, taking Dalian soya futures along also to historic highs.
Chinese interest in physical soyabeans had dried up despite lower C&F premiums for South American cargoes, after sealing deals last week to buy about eight cargoes.
"Crushers are shocked," said a trader in Beijing. "Maybe they need some time. Based on replacement prices, crushing margins are still negative."
Traders said crushing margins had improved from early this year, but many faced losses unless they were using oilseed acquired before the latest spurt in soya futures.
While domestic soyameal prices climbed to 3,600-3,650 yuan per tonne ($435-$441) in the consuming south, compared with around 3,500 yuan ($423) one week ago, volume was small, they said. Feed millers were reluctant to pay such high prices.
South American soya cargoes were seen offered at C&F premiums of 150-170 US cents per bushel for June and July shipment, down from 165-175 last week.
"Whatever (meal) demand there is shrinking. Farmers are already losing money at today's meat prices and costs of raw materials.
Feed millers are losing money. The crushing industry is losing money," said another trader in southern China. "Rationing is happening.
Soon or later CBOT has to rationalise," the trader added. Traders said the timing of the CBOT jump was also unfortunate for China as it usually took a few months before meat demand recovered from a seasonal slump following the Lunar New Year celebration in January or February.
"For the time being, maybe there's a little bit too much soyameal being produced," said a third trader.
"Crushing capacity in the short term has overtaken demand."
Traders were also watching the weather in China to assess the development of rapeseed after cold and wet spells over the past few weeks.