May 2, 2011

China's May soy imports expected to remain stable

China is expected to import 4.4 million tonnes of soy in May, almost flat from a year ago, according to a recent forecast by China's commerce ministry.

For April, imports are expected to rise 24% from March to 4.34 million tonnes, but only 3% higher than the same period a year ago, according to Reuters's calculation based on the figures released by the ministry and Customs.

China's robust appetite for soy has been scaling back since late last year when Beijing started to release stocks from its huge state reserves as part of efforts to tame food inflation.

In early April, the government's plan to sell three million tonnes of cheap domestic state soy reserves led many buyers to try to defer or cancel their earlier booked South American soy cargoes.

The China National Grain and Oils Information Centre on Friday (Apr 29) said that China has also cancelled two Brazilian soyoil cargoes due to sluggish sales of the cooking oil at home.

"We heard some middle-and-small-sized crushers were closed down since they were facing swelling soymeal stocks, which can not be stored for too long as weather warms up," said Ma Xiaolei, an analyst with Maine Futures.

Beijing has ordered banks to tighten loans offered to grain-soy plants as well as other grain companies in buying soy and grains, which triggered a wide sell-off of farm futures on the Dalian market, said Ma.