February 2, 2011

Chinese demand for US soy imports shows no sign of abating

Despite weakening crush margins in China, imports of US soy were not reduced, said Standard Chartered in a research note.

Imports of US soy, which reached 16.7 million tonnes in the October-January period, exceeded total imports of 14.3 million tonnes in the first four months of the previous marketing year.

Total Chinese soy imports last year hit a record 54.8 million tonnes, and the Ministry of Commerce raised its estimate of January imports Monday (Jan 31) to 4.8 million tonnes.

On the demand side, Chinese soy consumption shows no sign of abating, although the pace of US exports has moderated from its blistering start at the beginning of the marketing year, according to analyst Abah Ofon.

Chinese demand is likely to support global prices, especially since Argentine soy output continues to be threatened by weather patterns.

"We highlight the fact that soy yields have already been adversely affected in Argentina and the rainfall only arrived in time to stem further losses," Ofon said. "This explains why official output estimates remain unchanged and we are also inclined to remain conservative on Argentina's soy output."

Global soy supply is also an issue in Brazil, where above-normal rainfall could delay the harvesting of mature soy, Standard Chartered said.

The research house projected global soy prices at US$15.50 a bushel in the second quarter of this year. The most actively traded March soy contract on the Chicago Board of Exchange settled 15 cents, or 1%, higher at US$14.13 a bushel on Tuesday (February 1).

Chinese soy futures on the Dalian Commodity Exchange have risen 9% since the start of the current marketing year on October 1.