March 31, 2004

 

 

Japan Soy Imports Seen Falling Due To High Price

 

Japan is likely to reduce soybean imports this year due to poor crushing margins, which have been hit by soaring Chicago futures prices, but is expected to buy more rapeseed, industry sources say.

 

An expected rise in supplies of soymeal, particularly from China, is seen as an added factor that will encourage crushers to buy rapeseed rather than soybeans, they said.

 

"As you know, the soybean futures market in Chicago has topped $10 (per bushel) and to put it simply it's just not profitable to produce oil (from soybean)," a trader with a leading Japanese crusher said.

 

Soybean futures on the Chicago Board of Trade (CBOT), the benchmark for the world's oilseeds markets, hit a 15-1/2-year high of $10.63-) per bushel earlier this month.

 

A trader at another top Japanese firm said his company planned to import less soybean this year, although it expected demand for oil to be stable to slightly higher than last year.

 

He said his company was likely to crush more rapeseed.

 

"(Edible) oil is mostly produced from soybeans or rapeseed in Japan...and of the two, profit margins are currently slightly better using rapeseed," he said.

 

Import figures already underscore the trend.

 

Government import figures released this week show that Japan imported about 736,000 tons of soybeans in January and February, down 20 percent from a year earlier.

 

An outlook issued by the Agriculture Ministry last week also anticipated a decline in soybean imports in 2004.

 

The ministry said it expected Japan's demand for soybeans to decline to 4.98 million tons this year, down 3.75 percent from a year earlier, while imports were expected to fall by an even sharper 8.18 percent year-on-year to 4.75 million tons.

 

A farm ministry official said the shortfall in supplies was likely to be covered by stocks. At the end of 2003, Japan's stocks of soybeans stood at 350,000 tons while holdings of rapeseed stood at 180,000 tons.

 

Japanese firms are also expected shift to crushing rapeseed because it produces less meal - used as a protein source for animal feed - than soybean. Meal imports are expected to rise.

 

The ministry official said that crushing soybeans produced roughly 20 percent oil and 70.5 percent meal compared with about 40 percent oil and 50-60 percent meal for rapeseed.

 

"Excess soymeal will be an additional reason...to depress the price of oil," the second trade source said.

 

The ministry report said soymeal imports were likely to rise 10.5 percent this year to 1.15 million tons.

 

It did not provide a breakdown of anticipated imports by country, but said it expected supplies from China to increase markedly.

 

Imports of meal from rapeseed were expected to be stable at 20,000 tons.

 

Soybean imports last year amounted to 5.17 million tons, up 2.66 percent from 2002.

 

The United States was by far the largest supplier, shipping some 3.86 million tons or about 75 percent of total imports.

 

Brazil trailed at a distant second at 890,000 tons and Canada was third at 189,000 tons.

 

Japan imports most of the soybeans it needs. Domestic production last year was only 270,000 tons.