China’s soymeal, rapeseed meal futures soar on ASF vaccine report

Soymeal and rapeseed futures in China rallied sharply on Monday, as the market responded to an academic report detailing the successful test of a potential vaccine for African swine fever (ASF).

A medical team at the Chinese Academy of Agricultural Sciences (CAAS) successfully trialled the ASF vaccine, releasing its findings in a research paper published in Science China's journal. 

“Our study shows that HLJ/-18-7GD is a safe and effective vaccine against ASF, and as such is expected to play an important role in controlling the spread of ASF,” the paper said.

The virus has killed million of hogs in China since August 2018, when it was first identified, and spread rapidly to claim the millions more hogs in neighbouring Vietnam before spreading further afield.

The report was enough to drive both soymeal and rapeseed meal futures – key sources of protein in animal feed – to reach a multi-month high on Monday.

The most liquid soymeal futures on the Dalian Commodity Exchange surged nearly 4% from the Friday close to hit a two-month higher of CNY2,719/mt ($390.66/mt).

For rapeseed meal, the most active future on the Zhengzhou Commodity Exchange jumped to its highest level in four months at CNY2,370/mt ($340.52/mt).

“These facts demonstrate that ASF cannot be controlled by culling infected pigs alone, and the development and application of an efficacious vaccine is urgently needed,” the paper added.

However, the rollout and use of such a vaccine across the market remains a long way off, with researchers emphasising that it is early days and there remains uncertainty ahead.

“The media had a misleading interpretation of the results,” said Zhu Zengyong, a researcher from CAAS, referring to the early media coverage that accompanied the first reports of the vaccine.

“The research and application of vaccine still has uncertainty in the future,” Zhu said.

Many market sources also believe that the rally lacks strong fundamental support.

“The rally was started by the vaccine rumour, but it was then dismissed. There were repercussions from equity and commodity markets today, along with a correction of crush margins,” said an analyst at a major Chinese crusher.

“The bullish trend today was not reasonable. It exceeded expectations,” one soymeal purchasing manager told Agricensus, adding that low soybean vessel arrivals and decent physical soymeal demand may have supported the futures.