China’s soybean meal exports are set to nearly double to around 2 million tonnes in 2017/18, traders said on Monday, lifted by a smaller crop in the world’s biggest exporter, Argentina, and strong oilseed processing profits at home.
Asian countries led by Japan, South Korea and Vietnam are key importers of soymeal, taking shipments largely from South America. But a severe drought is expected to curb Argentina’s soybean and corn production.
“It will help also Chinese crushers boost their excess processing capacity,” the trader said, speaking on condition of anonymity because he was not authorised to speak to media.
Argentine farmers are expected to harvest 42 million tonnes of soy and 34 million tonnes of corn in the 2017-18 season, the Buenos Aires grains exchange said last week, below prior estimates of 44 million and 37 million tonnes respectively.
The estimates marked the latest in a string of reductions to harvest forecasts due to prolonged drought in the country’s central Pampas grains belt. The exchange’s initial estimates were for 54 million tonnes of soy and 41 million tonnes of corn.
China’s soybean crush margins have remained largely positive since August last year, with strong animal feed demand from domestic pig farms. China consumes around half of the world’s pork production.
“China has been regularly supplying meal to Japan but this year it is likely to sell to Vietnam, Thailand and Indonesia as well through the South China sea,” said a second trader, speaking on the sidelines of the industry conference.
Soybean meal prices have climbed almost 9 percent this year, lifted by the drought in Argentina.
China enjoys shorter shipping time to some of the key Asian markets, with delivery expected taking just a few days as compared with more than a month from Argentina.