April 16, 2014

Oil World: declining Chinese Demand slows world soy exports

With Chinese demand declining on ample stockpiles, the pace of soy exports from the US and South America is likely to slow through the end of the season, Oil World said in a report.

Combined exports from Brazil, Argentina and the US will fall to 45.09 million tonnes from April through September, less than the 46.86 million shipped in the same period last year, the Hamburg-based researcher said.

Soy prices on the Chicago Board of Trade rallied 13% this year as US stockpiles tightened amid increasing demand from China in the first half of the season.

Chinese importers defaulted on about 500,000 tonnes of soy after failing to get credit, while slowing demand previously spurred China to cancel some soy import orders from South America, Oil World said.

"The strong dependence on demand from China is currently having repercussions on soybean producers and exporters," Oil World said, adding that is "likely that soybean demand will suffer temporarily from the large soybean stocks accumulated in China and other importing countries in recent months."

US soy exports will likely fall to 3.2 million tonnes in the six months through September, compared with the prior seven-year average of 8 million tonnes during the same period.

Brazil's exports through September is forecast to drop by 8.5% on-year to 32.88 million tonnes, while Argentina's shipments is estimated to rise 26% from the previous season to 9 million tonnes, according to the report.