Summary: China’s “spot” soybean crushing margin today was 79 Yuan/MT, down from last week’s 125. The “forward” margin was 9 Yuan/MT vs last week’s 43 Yuan/MT. However, the forward margin was 90 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 will likely result in an increase in the USDA’s next WASDE projection for US soybean exports.
Today, the estimated crush margin for imported soybeans “spot” delivery in China was 79 Yuan/MT (see red line in chart below). That was down 47 Yuan from a week ago.
The crush margin for beans for “forward” delivery was 9 Yuan/MT (see blue line in chart above). That was down 34 Yuan from a week ago. However, the forward margin was 90 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 unchanged from a week ago but is approaching 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 3.5% from a week ago. Six 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 –280 Yuan/MT. This is was down 20 Yuan from a week ago. A year ago was the lowest import margin in over 4 years. The palm oil import margin was -10 Yuan/MT. That was down 58 Yuan from a week ago. Palm oil import margins are usually negative but over the last two years imports have been profitable more frequently.