(Bloomberg) -- An improvement in Chinese soybean crushing margins is signaling increased demand for the oilseed just as farmers in the US prepare to reap a record crop.
Chinese crush margin — a gauge of profitability for processing soybeans into meal for animal feed and oil for consumption — has been negative since June, but has recovered to levels not seen in over two months, according to data from Shanghai JC Intelligence Co.
Better margins could translate into more imports of the oilseed as the US is getting ready to harvest its biggest soy crop ever.
So far, Chinese import demand from the US has been sluggish, with the Asian country having turned to Brazil for much of its needs. The US sold 2.89 million metric tons of soybeans to China for delivery in the 2024-25 season. That’s the lowest in 18 years outside the 2018-2019 period affected by a trade war, and down 47% from a year ago.
But a recent drop in futures — to a four-year low in August due to an expected record crop in the US — is helping margins to improve in China.
There are signs China’s hog herd is expanding, and — following reduced soy production in Brazil — the country is expected to secure an additional 675 million or more bushels of US soy through the end of the year, said Ben Buckner, chief grains analyst for AgResource Co.
Soy futures remained firm Wednesday in Chicago after the US Department of Agriculture showed crop conditions dropped below the average estimate of analysts surveyed by Bloomberg. The results came as another heat wave is expected to hit the western grain belt over the next two weeks.
--With assistance from Gerson Freitas Jr..
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