Asia Grain Outlook on Friday: China traders mostly unaffected by loan curbs

 

 

China's agricultural commodities imports probably won't be affected much by Beijing's effort to rein in excessive lending, traders and analysts said Friday.

 

"I don't see any impact (on grain traders) now. We are not affected, and I didn't hear that anybody has been affected," an analyst at a major international agricultural commodities trading house in Beijing said.

 

Concerns over China's credit tightening have weighed on financial markets around the world this week, after major state-run banks including Industrial & Commercial Bank of China Ltd., Bank of China Ltd., and China Citic Bank Corp. suspended most lending for the rest of this month under pressure from regulators.

 

The tightening also prompted worries that Chinese grain buyers could face cancellations of lines of credit or rejections of loan applications, resulting in less demand for the physical farm products.

 

The lending controls "should have a very limited impact on big firms...For small ones, there can be (some impact), but so far we haven't heard much about it," said Tu Xuan, an analyst at commodities consultancy Shanghai JCI.

 

A trader at Heilongjiang Jiusan Oil and Fat Co., a major soy crusher in China that is also an importer of soy, said the credit tightening won't have any impact on big enterprises, such as Jiusan, COFCO, or Louis Dreyfus, as they have good credit records.

 

Several big physical grain trading firms, including Qinhuangdao Lihua Starch Ltd., said so far their credit lines haven't been affected.

 

A senior grain analyst with COFCO Ltd. said that middle and small-sized enterprises could be affected by the credit curbs, but they usually contribute very little to the total grain imports.

 

"The purpose of the lending controls is to prevent money from flowing into the stock market for speculation, or fueling the property market bubble," not preventing normal business needs, the analyst in Beijing said.

 

China bought 42.55 million metric tonnes of soy in 2009, up 14% from the previous year. Of the total, 51% was imported from the U.S.

 

The country's wheat imports last year rose sharply to 893,710 tonnes from 31,873 tonnes in 2008. The U.S. was the top supplier, accounting for 44% of the total.

 

Benchmark March soy futures traded on the Chicago Board of Trade fell 2.2% from a week earlier to US$9.30/bushel as of 0824 GMT. March wheat futures were down 2.6% at US$4.85/bushel.