China’s soymeal futures rose to hit their trading limit on Monday as many crushers suspended operation because of a soybean shortage and coronavirus outbreaks in South America further disrupted exports of the oilseed.
"The operation suspension and bean shortage (at crushers) is expected to last longer than expected," said Bai Jie, an analyst with COFCO Futures. "While port operation in Brazil and shipping has also slowed down due to the coronavirus."
China’s soymeal futures on Monday rallied 4%, triggering the trade limit, and settled at 2,943 yuan ($413.61) per tonne, their highest since October.
China crushed around 1.387m tonnes of soybeans last week, down 5.7% from the previous week, and the lowest since 2016, according to agriculture consultancy Cofeed.
Nationally, Chinese crushers only operated at 39.8% of capacity last week, Cofeed data showed, while soybean inventories are at their lowest since at least 2010.
"There is a widespread delay of soybean shipments," said a manager at a crushing plant in southern China, who declined to be named as he was not authorized to speak to the media. "Now we can only cut operations and hang in there till the next cargo arrives."
Chinese importers crush soybeans into soymeal for the livestock sector and cooking oil.
Rains in Brazil, the top soybean exporter to China, have slowed down exports which has increased supply concerns as Chinese buyers did not book many cargoes before the Lunar New Year holiday in expectation that demand would be lower after the holiday.
There is mounting concern that China may halt imports to prevent the spread of the coronavirus from other countries.
"If there is obligatory quarantine at ports nationally (in China) then shipments would be delayed for 14 days and supply would be very tight. Commercial bean stocks are very tight right now so the market is worried," said a Beijing-based trader
He added that the market is also concerned that the spread of the coronavirus in Brazil and Argentina could lead to strict quarantine measures that would further delay loading of vessels.
Dock workers at the biggest port in Brazil may hold a strike over concerns about coronavirus risk. While a key grains port town in Argentina was blocking trucks from entering town on Friday to stop the spread of coronavirus.
China’s rapeseed meal futures also rose to the trading limit after jumping 5% to 2,477 yuan per tonne.