May 27, 2008

China may slash soy import duties to augment supply

China may cut soy oil import tariffs to boost local supply amid growing demand and record prices, analysts said.

Speculations that the Chinese government may slash duties after consultation with industry players led to a 2.3-percent decline in soy oil futures prices in Dalian last week.

Chen Lina, analyst at Beijing Orient Agribusiness Consultant Ltd., said that the government will likely boost vegetable oil imports by reducing the import duty as domestic demand seems to outstrip supply.

China currently levies a 9-percent tariff on almost all vegetable oil imports except palm oil in solid form, Chen said.

The government cut soy import tariffs to 1 percent from 3 percent until the end of September.

Tommy Xiao, an analyst at Shanghai JC Intelligence Co., said speculations that the country may cut the soy oil import duty from 9 to 3 percent has been around since November.

Such a cut is obviously bearish for the domestic market and bullish for foreign ones, Xiao added.

China's soy oil imports jumped 28.3 percent in the first four months of this year from a year ago to 1 million tonnes, the China National Grain and Oils Information Center said.