February 7, 2009

China's demand for US soy falls on ample supplies

China's soy crushers have lost interest in near-month US soy imports in anticipation that domestic supplies will be sufficient, an official survey said on Friday (Feb 6).

With China's soy imports in February and March estimated to reach an average of 3 million tonnes each, supplies in coming month will be ample to meet demand, said the China National Grain and Oils Information Centre (CNGOIC) in a report.

"The demand for near-month shipments will decline in coming weeks while purchases for forward-month cargoes are expected to remain at a high level," the report said.

The report said many crushers have not returned to the market after the week-long Lunar New Year holidays, but may shift to South American supplies once they return.

February imports were likely to remain at January levels of about 400,000 tonnes, down 42 percent from December.

Soymeal prices declined after the holidays due to weak demand from livestock breeders.

The report said excessive soymeal supplies are expected in coming weeks, which will continue to pressurise prices.

Wheat prices rose amid severe drought conditions in parts of major growing areas, but flour mills are expected to increase purchases and keep buying in coming weeks, reflecting low inventories.

The corn market remained bullish, supported by government purchases that kept northeast prices stable. Post-holiday demand fell, and appeared to have worsened. The corn market was expecting government purchases for reserves in northern China.