June 8, 2012

 

China's US soy imports to decline

 

 

This year, China will import less soy from the US, thanks to Chinese government measures in 2011 to manage the country's price hikes by releasing a large amount of state reserves, said the American Soybean Association.

 

The country's large imports of Brazilian beans last fall will further dent its imports from the US, Paul Burke, ASA North Asia region director, said on Wednesday (June 6). But he did not disclose the exact amount of the reduction.

 

However, driven by its burgeoning livestock industry and ongoing urbanisation, China's soy imports were estimated to continue growing in the long term, Burke added.

 

China is currently the largest overseas market for US soy farmers. The country imported 52.6 million tonnes of soy last year, nearly half of which came from the US, accounting for 60% of total US soy exports in 2011.

 

In February, a Chinese trade delegation consisting of major State-owned food companies such as China National Cereals, Oil and Foodstuffs Corp and China Grain Reserves Corp, also known as Sinograin, signed a historic US$6.7 billion contract to buy 13.4 million tonnes of US soy.

 

But given soyoil processors' limited purchases of State reserves, Chinese analysts said the State reserve had only a limited effect on the country's soy imports from the US.

 

Gao Yanbin, an analyst with SWS Research Co Ltd, reckons the reduction in soy imports this year, caused by the release of stocks from the State reserves, could amount to one million tonnes at most.

 

In the meantime, the pressure of an economic slowdown in China would prevent oil processors from replenishing their inventory, said Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant Ltd, one of the largest consultancies in the industry.

 

"Chinese consumers, especially those living in big cities, are starting to question the safety of soy oil made from genetically modified soy," Ma added. That would affect the country's demand for US soy.

 

In a bid to contain inflation, the Chinese government started releasing its national reserve of soy at the end of 2010, in order to stabilise the price of cooking oil.

 

But most of the national reserve has remained untouched over the past two years, as domestic soy are generally more expensive than imported beans.

 

In last month's auction, however, domestic soy became popular with oil processing companies, largely as a result of the high price of soy on the international market, driven up by a drought in South America and a global tight supply. But even so, only 300,000 tonnes of soy were sold to the companies.

 

During the first four months of this year, China's soy imports jumped by 22.3% on-year to 18.2 million tonnes, according to the General Administration of Customs.