Summary: China’s “spot” soybean crushing margin today was 83 Yuan/MT, down from last week’s 89. The “forward” margin was 14 Yuan/MT vs last week’s 29 Yuan/MT. However, the forward margin was 61 Yuan above what it was a year ago. Five months ago, the forward margin fell to its lowest level in 4 years. In the USDA’s December WASDE, China’s import projection was left unchanged at 90 MMT. However, China’s own government-issued monthly S&D report pegged imports at just 83.65 MMT. Due to the government shutdown, we don’t know how many soybeans Chinese’s state-owned enterprises (SOE’s) have purchased but industry sources estimate purchases at 5 MMT. These purchases of US soybeans for delivery in 2018/19 could result in an increase in the USDA’s next WASDE projection for US soybean exports. However, US exports to other markets is lagging the pace needed to meet USDA’s export projection of 1,900 Mil Bu. ARC’s projection for US exports is 1,800 Mil Bu.
Today, the estimated crush margin for imported soybeans “spot” delivery in China was 83 Yuan/MT (see red line in chart below). That was down 6 Yuan from a week ago.
The crush margin for beans for “forward” delivery was 14 Yuan/MT (see blue line in chart above). That was down 14 Yuan from a week ago. However, the forward margin was 61 Yuan above what it was a year ago. Five months ago, the forward margin was lowest since Mar 2014.
Above is a chart that shows the soymeal price used to calculate the crush margin. Soymeal’s price was down 1.1% from a week ago and is at an 18-month low (reflecting reduced demand from China’s hog sector). Below is a chart that shows the soyoil price that was used to calculate the crush margin. Soyoil’s price rose 2.3% from a week ago. Seven weeks ago, soyoil’s price set a 9-year low.
The chart below shows import margins for soy oil (see red line) and palm oil (see blue line). China is the world’s second largest importer of vegoil. The soy oil import margin was –300 Yuan/MT. This is was down 120 Yuan from a week ago. A year ago was the lowest import margin in over 4 years. The palm oil import margin was 2 Yuan/MT. That was up 56 Yuan from a week ago. Palm oil import margins are usually negative but over the last two years imports have been profitable more frequently.