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UPDATE 3-Dreyfus, others shut soy crushing operations in China on power curbs

reuters.com · 09/24/2021 06:49
UPDATE 3-Dreyfus, others shut soy crushing operations in China on power curbs

Adds Bunge statement

- Soymeal prices in China, the world's top consumer of the animal feed ingredient, are rising after at least 20 soybean crushing plants shuttered to comply with curbs on industrial power consumption, industry participants said on Friday.

Five crushing plants in the northern city of Tianjin closed this week, said Tianfeng Futures in a note on Friday, including a facility owned by top trading house Louis Dreyfus Company (LDC).

The LDC facility in Tianjin has a daily crushing capacity of 4,000 tonnes. It has been closed since Sept. 22, the company told Reuters.

Global crops trader and processor Bunge Ltd BG, which has a crushing facility in Tianjin, "responded to the government mandate but total production is not materially different from what we expected," the company said in an emailed statement.

Around five plants in the eastern province of Jiangsu have also closed, said a soymeal buyer with a major feed company.

At least 20 plants nationwide are affected, said a Singapore-based trader at an international firm with soybean processing factories across China.

Cash soymeal prices in Tianjin JCI-SBM-TJIN are up by about 100 yuan ($15.47) a tonne to 3,920 yuan in the last two days as worries grow over short-term supply ahead of the week-long National Day holidays beginning Oct. 1.

"Cash [price] is on fire," said the soymeal purchaser.

"Those shutdowns impact our plans. This is normally the time when feed mills need to build stocks ahead of the holidays," he added.

China is the world's top soybean consumer, crushing the beans to make soymeal to feed livestock and oil for cooking.

China's provincial authorities have stepped up enforcement of emissions curbs in recent weeks, leading to strict limits on power loads that have hampered production across a swathe of industrial consumers. nL1N2QQ05A

Soybean imports by top buyer China have, however, been weaker than normal amid soaring global prices, leaving little risk of excess stocks building up at ports or crushers.

But rising meal prices will pressure hog farmers, already incurring heavy losses because of weak hog prices and rising feed costs, said Darin Friedrichs, senior Asia commodity analyst at StoneX.

LDC declined to comment further on the impact. It is not known how long the curbs on power consumption will continue.


($1 = 6.4637 Chinese yuan renminbi)


(Reporting by Dominique Patton in Beijing. Additional reporting by Naveen Thukral in Singapore; editing by Jason Neely and David Evans)

((dominique.patton@thomsonreuters.com;))