April 12, 2011

 

China may reduce soy imports on poor crushing margins

Chinese soy importers are likely to cancel some cargoes due to the poor crushing margin and lower prices of soymeal, an official with state grain trader Cofco Ltd said Monday (Apr 11).

 

Soy imports in April-September, the second half of the marketing year ending September 30, are expected to fall from a year earlier, despite imports in October-March being up about 20% from a year earlier, said Liu Ni, Cofco's manager for oils and oilseeds information.

 

China may import 53-54 million tonnes of soy this marketing year, slightly lower than the 54.5-54.8 million tonnes previously forecast, she said.

 

"Imports will be lower as most domestic crushers are operating at around 40% of their processing capacity amid tight operating margins," she said. The country currently has total soy crushing capacity of 110 million tonnes a year.

 

Last year's rate of capacity utilisation was about 55-60%, she said.

 

Crushers lost about RMB300 (US$46)/tonne from imported soy and will lose more as prices are increasing, but the loss is expected to narrow with the deliveries of South American soy from May, she said.

 

Most importers have suspended imports of distillers' dried grains (DDGS) - a type of feed product - since March, following an anti-dumping probe initiated by Chinese authorities, Liu said.

 

Domestic rapeseed output is likely to fall by about 15% to below nine million tonnes this year, she added.

 

The government now has about 1.5 million tonnes of rapeseed oil, down sharply after it released about 1.6 million tonnes of rapeseed oil since October last year, and 2.2 million tonnes of soyoil in reserves, she said.

 

However, commercial edible oil stocks were high at about three million tonnes amid weak market sentiment due to the off season and government's price controls, she added.