July 27, 2012

 

China's June agriculture imports hike

 

 

The agricultural imports of China in June gained strongly despite lower global prices and resilient local demand, customs data showed Monday (July 23).

 

Analysts called the numbers "expected, necessary and not bearish," as the estimates indicated a much-desired soft landing as opposed to a more problematic and severe drop in demand that many have been fearing.

 

Purchasing appetite in the world's largest buyer of many commodities is a key indicator of global demand at a time when many of the western economies are yet to recover from years of slow or little growth.

 

Bucking the trend in the market for industrial metals, agricultural imports showed few signs of a slowdown.

 

Corn imports rose 47-fold on-year to 528,647 tonnes, which was also nearly five times the volume imported in May, the General Administration of Customs said. Cotton imports were up four times on-year to 475,964 tonnes.

 

While government stockpiling explained some of the imports, others were drawn by attractive arbitrage opportunities. Chinese cotton in June fetched a premium of RMB4,000 (US$625.76) a tonne, or US$628 over global prices, thanks to a government-protected market.

 

Soyoil imports were also four times higher on-year to 113,907 tonnes. Soy imports were near record highs as global prices fell nearly US$37/tonne from early May to mid-June.

 

Still, a US drought has driven Chicago grain prices to record levels in recent days and may weigh on China's agricultural imports in coming months.

 

China's growth slowed to 7.6% in the second quarter, but analysts say it doesn't mean demand has dried up.

 

"How can China, suffering an economic slowdown, with high inventories of commodities, still manage to import more commodities than it did in the same period of last year?" Mirae Asset Securities analyst Henry Liu said. "It still looks like a soft landing to us."

 

Property sales in June rose 6.9% on-year, ending seven months of continuous decline and signaling a potential turnaround in the fortunes of the real-estate sector, Dow Jones Newswires calculations showed.