China’s Market Price of Soybean Meal Rebounds after Long-term Declines Since Mid-June 2015

Date: 2015-08-11

“In 2016, China will adjust the planting structure of corn to reduce the planting area. CCM believes that this is mainly attributed by high inventory pressure, increasingly reducing planting area of soybean and the to-be-cancel temporary purchase and storage policy.

CJ announced to increase the price of lysine by 15% in the world. However, this has little effect on the overall market due to the limited downstream demand and large inventory of manufacturers.

Since the last ten-day period of June 2015, China’s corn price has declined ahead of time. CCM believes that this was mainly attributed by the new grain’s entering the market, high inventory pressure, policy, stagnant downstream market and competitive

Since many domestic manufacturers suspended production for an overhaul, the market price of VC rose slightly in July. CCM predicted that the price of VC would remain stable and even experience a slight increase in the coming two months.

In H1 2015, Meihua Bio recorded rise in net profit, which was supported by the rising sales of MSG, threonine and lysine.

Fufeng Group’s 100,000 t/a threonine project and 200,000 t/a MSG project are predicted to put into production in 2016. At that time, Fufeng Group will have the world’s largest amino acid fermentation base.

DuPont jointed hands with Jilin New Tianlong, planning to build a cellulosic ethanol project. Although the economic benefit of the project is not high in the current stage, the project enjoys promising market prospect under the policy influence in the future.

Since mid-June 2015, China’s market price of soybean meal rebounds after long-term declines. However, soybean meal is still a valuable substitute for corn.

In Q2 2015, China’s import volume of DDGS rebounded rapidly, which put high inventory pressure on ports in a short time. Import traders have to reduce the price, thus pulling down the market price greatly.

In H1 2015, China’s market price of corn gluten meal slumped, affected by the sluggish livestock industry, declining price of substitute and loss-making corn starch and ethanol manufacturers.

In July 201 5, China’s corn deep-processing industry remains sluggish. The prices of DDGS, ethanol, corn gluten meal and many corn products continue declining. At the same time, corn price starts to drop two months earlier than last year. CCM’s data show that in July 201 5, China’s market price of corn was USD385.9/t (RMB2,360/t), down 2.2% month on month compared to USD394.5/t (RMB2,41 0/t) in June.

The MOA released the Reply Summary of Suggestions at the 3th Session of the 12th National People’s Congress, indicating that China will increase the price decision of market and reduce the policy interference for corn, soybean, cotton and other varieties with elastic demand. This is an omen that Chinese government may cancel the temporarily purchase and storage policy for corn in the near future.

For the international trade, the exports for corn and its byproducts continues recovering. Along with the coming sales season in summer, the export volume of starch sugar records significant rise. And the import of DDGS starts to rebound, getting away from the influence of GM corn.

It is forecasted that in Aug., the declining corn price is expected to revive the stagnant downstream corn deep-processing market and increase the operating rate.

The USD/RMB exchange rate in this issue is USD1 .00=RMB6.11 49 on 1 July, 201 5, sourced from the People’s Bank of China. All the prices mentioned in this report will include the VAT unless otherwise specified.”

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