Massive imports eat into profits of Chinese soy plants

China's large soy imports in June - seen at a record six million tonnes - have began to eat into profits of soy plants and sour their interest in near-month cargoes, according to the China National Grain and Oils Information Centre (CNGOIC).

Soy imports from May to June were seen exceeding 15 million tonnes. Soymeal prices <0#ASSOYMEAL-CN> have declined by 5% this week. Falling meal prices would give negative margins to crushers, which are likely to scale down production later.

Soyoil prices <0#ASSOYOIL-CN> stabilised, but large soy imports would put upward pressure on cooking oil prices.

Fewer feedmills joined this week's state corn auctions because of government restrictions. A lower volume and price sealed at the auction could weaken expectations of even higher prices, though some still think prices would rise again later.

Corn prices in Shandong, which has the country's most corn processors, have declined this week as more trading houses sold corn to make room for new wheat harvest. Profits for corn starch producers fell by 30% to between RMB60-80 (US$8.8-US$11.7) per tonne.

The central government began its fourth round of stockpiles of pork, prices of which have fallen for the fourth week in a row. Low pork prices could hurt restocking by farmers and feed demand.