April 20, 2004

Decline Forecast For Japanese Soybean Imports

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, according to industry sources.

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

"The soybean futures market in Chicago has topped US$10 per bushel and to put it simply it's just not profitable to produce soyoil," a trader with a leading Japanese crusher said.

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

Imports underscore trend

Government import figures released this week show that Japan imported about 736 000 tons of soybeans in January and February, a 20% decline on the same period of 2003.

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

The ministry said it expected Japanese demand for soybeans to decline to 4.98 million tons, down 3.75% from a year earlier, while imports were seen falling by 8.18 % year-on-year to 4.75mt.

A ministry official said that the shortfall in supplies was likely to be covered by stocks. At the end of 2003, Japan's soybean stocks stood at 350 000t, while stocks of rapeseed totaled 180 000t.

Japanese firms were also expected to shift to crushing rapeseed instead of soybeans as it produces more oil and less meal. As a result meal imports are seen rising.

The ministry official said that crushing soybeans produced 20% oil and 70.5% meal, compared to 40% oil and 50-60% meal for rapeseed.

The ministry report said that soymeal imports were likely to rise 10.5% to 1.15mt this year, with supplies from China increasing significantly. Meanwhile, imports of meal from rapeseed were seen stable at 20 000t.

In 2003, Japan imported 5.17mt of soybeans, a 2.66% increase over 2002. The US was the largest supplier, shipping 3.86mt, or about 75% of total imports. Brazil provided 890 000t and Canada 189 000t.

Japanese domestic soybean production totaled just 270 000t last year.