May 21, 2004

China's April Soybean Imports Fall As Soymeal, Oil Prices Drop

China's soybean imports fell 44 percent in April compared with a year earlier as a decline in prices for soymeal and cooking oil in the country reduced crushers' demand for the beans, analysts said.

China imported 1.23 million metric tons in April, down from 2.21 million tons a year earlier and 1.59 million tons in March, according to customs data. Imports in the first four months rose 8.9 percent, less than a 39 percent increase in the first quarter.

Prices of soymeal, used as animal feed, fell as farmers reduced the number of chickens, ducks and other poultry they rear after an outbreak of bird flu earlier this year prompted health authorities to slaughter 9 million farm fowl, said Liu Ri, head of research for Liaoning Cifco Futures Co.

"Crushing margins have been squeezed a lot lately,'' Liu said in Dalian, east of Beijing. "Farmers dare not increase their poultry flocks because they are concerned about having to slaughter them if bird flu returns.''

Soymeal for September delivery on the Dalian Commodity Exchange has fallen 14 percent over the past month to 2,907 yuan ($351) a ton. China's average soyoil price has fallen 5.6 percent to 6,800 yuan a ton.

Soybean imports may decline in the coming months as high prices deter China's crushers from buying.

Prices of soybeans, which are turned into soymeal after they are crushed to produce edible oil, have risen 40 percent on the Chicago Board of Trade.

Higher costs for domestic crushers have prompted some buyers to cancel soybean orders, and the pace of cancellations is picking up in May, making it likely there will be a "significant slowdown'' in China's imports of the grain starting in June, the China National Grain & Oil Information Center, a State Grain Administration affiliate, said in a report.