July 3, 2013

China's soy imports may surge on decreasing oilseeds crop

Oil World has warned China on the decline of the country's domestic oilseeds harvest which will whet its appetite for purchases of foreign supplies.

Many investors, both in Beijing and abroad, cast doubts over a USDA estimate that China's soy imports, the world's biggest, will surge some 10 million tonnes to a record 69 million tonnes in 2013-14.

One major European commodities house said at the weekend that "the trade is unconvinced" by the USDA forecast, which has gained particular scepticism amid signs of a slowdown in China's important manufacturing sector, and with concerns over bank lending too.

"Although they expect them to rise to 62-65 million tonnes," a figure at this level, in falling short of USDA forecasts, "could add volume back to global ending stocks", implying lower price potential.

However, Oil World said on Tuesday (Jun 25) that China's imports of oilseeds overall faced pressure from a harvest set to fall to a "multi-year low" of 48 million tonnes, "down two million tonnes from a year earlier and down 3.8 million tonnes from two years earlier".

Parts of China have been unduly dry, including the southern North China Plain where weather service MDA warned that "some dryness continues to develop", although recent rains which have hurt the quality of the wheat harvest have improved conditions in many areas.

The fall in domestic oilseeds production, "along with the comparatively low Chinese soy stocks at the start of the new season, will result in a pronounced increase of total Chinese oilseed imports in 2013-14", the analysis group said, referring to an August-July crop year.

Indeed, China looks set for a strong finish to 2012-13, with the country importing eight million tonnes of soy last month, a rise of 57% on month and 43% on- year.

The country has also been raising imports of rapeseed, which hit a record 1.66 million tonnes in the first five months of 2013, Oil World said.