April 14, 2008

 

China soy imports surge 36 percent on strong demand, low import duties

 

 

China's soy imports in the first quarter of 2008 surged 36 percent at 7.78 million tonnes, propelled by strong demand for edible oils and Beijing's lower import duties.

 

Soy cargo bookings also accelerated on the foreseen recovery of the pig industry.

 

In March, soy imports totaled 2.32 million tonnes, an increase of 10.5 percent on-year due to country's strong need for soy oil and soymeal.

 

Chinese traders expect soy supply to grow despite labor issues in Argentina which delayed some shipments of April and May cargoes to June.

 

An analysts at a government think-tank said that crushers booked huge amounts of cargoes on expectations of a recovery of the breeding industry.

 

The pig industry is expected to recover and increase the number of pigs this spring after the government tamed the blue ear disease outbreak, which killed millions of pigs in 2006 and 2007.

 

Domestic soy oil prices hit a record high early last month after Beijing's price control on the edible oil had forced many crushers to cut supplies.

 

A lower import in February, at 2.02 million tonnes, had also contributed to the tight supply.

 

Traders estimate soy arrivals in April to be around 2.5 million tonnes and at more than 3 million tonnes for May and June, respectively.

 

Meanwhile, soy prices have climbed up on Friday as farmers were reluctant to sell due to dwindling stock.

 

Prices in Jiamusi city in the major producing region of Heilongjiang province were around RMB4,400 a tonne, up from around RMB4,300/tonne a week ago.

 

The recovery in global and domestic futures prices helped support cash prices.

 

Soy oil prices were slightly higher on rising futures prices. Yet traders stayed cautious after the recent large price fluctuations.

 

First-grade soy oil in Rizhao city in Shandong province was trading between RMB11,900/tonne and RMB11,950/tonne, up from RMB11,700-RMB11,800/tonne a week ago.

 

Prices in Zhanjiang city in Guangdong province were RMB11,850-RMB12,000/tonne, compared with RMB11,800-RMB12,000/tonne a week ago.

 

Soyoil prices are unlikely to tumble again as domestic demand is likely to pick up gradually after traders sell their earlier stocks, said China National Grain and Oils Information Center in its weekly note.

 

Soymeal demand is likely to pick up in the coming weeks as traders and feedmeal companies have almost used up their earlier stocks, and the livestock sector is recovering, analysts said.

 

US$1 = RMB6.99 as of April 14, 2008