Recently, China has been facing a shortage of soybean meal. This is a crucial ingredient in the manufacture of pig feed. The shortage is manifested in a significant retraction in the Dalian Commodity Exchange futures market.
According to Bloomberg, on October 27, futures for November delivery reached a settled price of 4,884 yuan ($676) per ton, about 800 yuan higher than January prices.
When crush margins turned negative in the summer, Chinese processors reduced their purchases of foreign soybeans, reducing arrivals.
As farmers fatten their pigs for the winter and for festivals such as the Lunar New Year in January, demand for soybean meal has also increased seasonally.
As reported by Reuters on October 18, low water levels in the Mississippi River are impacting the transport of grain, fertilizer and other commodities along the vital waterway.
Soybean supplies in China are expected to become even tighter as shipments from the United States are delayed, exacerbating shortages of the essential ingredient, soybean meal, for animal feed, and keeping prices at record levels.