February 23, 2009

 

ASA Weekly: Chinese demand for US soy remains strong

China's robust demand for soy is being enhanced by the Chinese government's accumulation of soy reserves as preliminary export data for January shows soy exports have been up more than 900,000 tonnes from last year.

 

However, shipments to the EU and the rest of the world were below year-ago levels for the fifth time in the past six months, reflecting the contraction in world demand. Analysts say China's 2008-09 (October/September) soy ending stocks will be at 9.5 million tonnes, up from an estimated 5.0 million at the end of the 2007-08 marketing year. This assumes China's total protein meal usage will increase by 5.7 percent in 2008-09 after increasing by an estimated 6.5 percent in 200708.

 

Soy becomes more profitable grain as recession affects demand

 

The recession in Western markets could mean weaker demand for feed grains in 2009, according to Kona Haque, commodity strategist for the Macquarie Group, a global company specializing in investment, advisory and financial services.

 

During the Agra Informa Investing in Soft Commodities & Agriculture conference in London last week, Haque said the economic slowdown will cause weaker demand for feed grains for ethanol and biodiesel, while demand for human consumption will be less affected.

 

Poor economics and credit availability resulting to lower planting and crop maintenance may affect next season's output amid world's commodities going into surplus.

 

Haque sees increased planting of soy for 2009, as the oilseed is currently more profitable than corn or wheat. However, soy demand may slip as output is expected to be limited due to a poor, drought hit South American crop.