May 16, 2008

 

China soy imports to slacken on high stockpile

 

 

China's soy imports are projected to relax this summer as slow soymeal sales caused soy stock to accumulate at ports, the Heilongjiang Soybean Association said.

 

As of May 9, soy stockpiles in China's major ports totalled 3.4 million tonnes and 3.6 million tonnes. Another 3.6 million tonnes of soy is expected to arrive within the month.

 

High imported soy prices, which have risen by US$14.29 per tonne from last week to US$728.57 per tonne, have slashed profit margins of soy oil producers.

 

Low soymeal sales have also forced some oil factories to suspend operations, an expert from the Heilongjiang Soybean Association told Interfax.

 

Industry analysts expect soymeal demand to recover by the next quarter. However, the recent earthquake that hit the major pig and poultry producing province of Sichuan cast some doubt to earlier forecasts.

 

China's state media reported that earthquake-affected regions account for 50 percent of the province's total hog production.

 

Analyst Li Leizhou, with CIFCO Futures, said that there is no telling right now how much damage the earthquake has caused or when soymeal will recover.

 

In the first four months of the year, China imported 1.02 million tonnes of soy oil, up 28.3 percent on-year, China Customs reported.

 

Soy futures finished lower on Thursday, with the most traded 2009 January delivery down 0.47 percent to US$640.29 per tonne.

 

The September soy oil delivery dropped 1.96 percent to close at US$1,617.43 per tonne.

 

Soy meal futures fluctuated on Thursday, with most contracts ending lower, although the most traded September contract edged up 0.19 percent.

 

Chinese analysts do not expect a recovery for soymeal demand soon, as the full impact of the earthquake in Sichuan remains unclear.