July 11, 2007

China's soy buyers risk pileup at the ports as soy demand remains low

China's soy industry may face a pileup at the ports despite reduced imports in recent months as high volume arrivals are expected this month in the midst of low demand.

Although soy imports have been going down in recent months, there is still a huge stockpile sitting in China's ports, the result of leftover imports.

Soy imports for the first half of the year is down 1.4 percent, according to official Customs figures. Soy import for June, at 2.52 million tonnes, was a 31-percent drop from a year earlier, according to Reuters. The figure was also a 15 percent drop from May 2007 figures, which was at 2.96 million ones.

However, industry analysts expects July arrivals to total 3 million tonnes, based on the bookings made earlier in the year, when prices were low. 

Traders said crushers had delayed August shipments of some South American cargoes. Costs for South American soy by then would be about RMB 3,550 (US$468.2) per tonne, higher than the RMB 3,250 per tonne now being offered at ports, according to the China National Grain and Oils Information Centre (CNGOIC).

Moreover, China already has more than 3.5 million tonnes of imported soy stockpiled at ports from arrivals in previous months.

China's crushers have been operating at reduced capacities due to the slow pickup in pig rearing activities.