July 9, 2007

 

China slows soy imports as feed markets fail to recover

 

 

China, the world's top soy importer, has slowed down soy imports as the feed markets continued to remain in the doldrums.

 

The drop was precipitated by rising CBOT prices and near-record freight rates, traders said.

 

Crushers had delayed shipments from South America as feed markets failed to pick up in China and are losing RMB 100-200 ($13.16-$26.32) with each tonne they crushed, a spokesman from a major soy crusher said.

 

However, shipments may not be delayed for much longer, he said.

 

CBOT soy prices have reached 3-year highs as more US farmers shifted to grow corn to take advantage of the ethanol boom.

 

While soy prices have moved higher in the US, the same cannot be said of soymeal and soyoil prices in China, which remained lacklustre given the slow recovery of the animal feed markets.

 

Crushers may choose to sell their August or July supplies back to suppliers as they would make more money than if they were to crush and sell it in the local markets at current prices, traders said.

 

Costs for Brazilian soy in August would be around RMB 3,500 (US$460.5) a tonne -- compared to about RMB 3,100 at present.

 

Heavy soy arrivals are expected in June and July, which the traders estimated at close to 3 million tonnes and more than 2.5 million tonnes respectively.

 

However, industry officials said feed demand should pick up by August or September, as more farmers, attracted by higher pork prices, pick up pig farming.