China ag futures spike as food shortage concerns mount
Domestic futures in China ranging from soymeal to palm oil all jumped on Monday as traders built positions on growing concerns of a potential food supply shortage amid the ongoing coronavirus epidemic.
Agricultural futures for the soybean complex and corn and palm oil listed on Dalian Commodity Exchange and those for the rapeseed complex and wheat and sugar on Zhengzhou Commodity Exchange all rose on Monday to their highest level in recent weeks.
“People were rumouring all types of issues in South America, suggesting that there could food shortage [in China]… Domestic agricultural sector was very excited today,” one China-based futures trader said.
Commodities that China imports a large amount of were leading the rally with soybean futures gaining 2-5% through the curve from last Friday’s close followed by soymeal, soyoil, rapeseed meal and oil, palm oil that jumped 1-3% across the board.
China imports around 85-90 million mt of soybeans a year mainly from Brazil and the US, accounting for more than half of total soybean imports globally.
Market participants have been circulating reports of potential disruptions to inland and port logistics in the US, Brazil and Argentina as more coronavirus cases were reported, as well as the cessation of palm oil production in Malaysia.
Supplies for China’s major agricultural imports, including soybeans and palm oil, could face a supply shortage if such disruptions occur.
Over 140 daily wheat, corn, soy, barley vegoils, meals and freight price assessments
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