A rise in Chinese soybean crush margins to a record high looks likely prove only a temporary spike, but it is too early yet to forecast a course for the country's corn import margins – also at an all-time top, INTL FCStone said.
The surge in Chinese soybean crush margins to some 800 yuan ($130) per tonne – up from a negative 400 yuan per tonne in early July - reflects market factors which look likely to unwind, Ying Ren, commercial grain manager at FCStone's Shanghai operations, said.
The prime cause was the strong recovery in demand for soymeal, which was constrained early in the year over fears over the wide spread of bird flu.
This demand is coming at a time when dynamics in soybean exporter countries are putting constraints on supplies up for grabs.
South America's exportable supplies have been largely shipped, while US ones have yet to be rebuilt, with the ongoing harvest believed to be about 50% completed.
'Margins will come down'
However, soybean crush margins look set to decline as import volumes recover, Ms Ren said, forecasting that "October shipments will improve".
Oil World, the German-based consultancy, has forecast that US soybean exports will hit a record high of up to 20m tonnes in the October-to-December quarter, boosted by demand from the likes of China at a time of thin South American supplies.
"It looks like crush margins will come down," she told Agrimoney.com, at the HGCA grains outlook conference in London.
On the Dalian futures exchange, futures in soymeal – the feed ingredient produced by processing soybeans - closed on Wednesday at 4,003 yuan a tonne for November delivery, a healthy premium to the January 2014 contract, which settled at 3,614 yuan a tonne.
However, it was less easy to predict the course of corn import margins, which have soared above 600 yuan ($100) a tonne, also a record high, and a sharp revival from a level of a negative 200 yuan a tonne four months ago.
The revival in margins reflects the support to domestic prices from government price guarantees set at roughly 2,300 yuan ($377 a tonne), at a time when world values have been falling, depressed by prospects for a record US crop.
"It is difficult to know what will happen when we do not know all the details of the government programme," Ms Ren said.