August 13, 2007

 

China's soy imports expected to drop just when feed demand picks up

 

 

Even as China's soy imports rose 20 percent to 3.03 million tonnes in July, experts are saying imports for the next few months would be lower at a time when feed demand is showing evident signs of a pick-up.

 

China's July soy imports amounted to 3.03 million tonnes, 20 percent higher than June's 2.52 million tonnes, despite news of cancellation of soy shipments as feed demand sagged in the country in the past few months.

 

However, traders expect the impact to be felt in the next three months, when imports tread lower.

 

Soy imports for the first seven months of the year were 2.6 percent higher than the same period the previous year.

 

China's soy arrivals is expected to drop significantly to about 2 million tonnes each month from August until October as crushers have reduced imports amidst high freight rates.

 

Meanwhile, signs of a pickup in domestic soymeal demand was evident as prices rose for the second week in a row last week. The market expects meal demand to keep growing in coming weeks.

 

Even though the meal market is showing signs of a pick-up, buyers were deterred from importing more soy because of the high freight rates from South America and the high soy prices from the US.

 

However, crushers may be inclined to import more after low arrivals in August and September, according to China National Grain and Oil Information Centre (CNGOIC).

 

The think-thank said feed mills were active in building inventories but the high cost of imported soy currently would make meal prices more expensive.

 

Demand from poultry and fish breeders was strong while that from pig breeders remained sluggish.

 

According to the centre, corn, wheat and paddy output would increase in 2007 while  soy and rapeseed output would drop on-year. China's corn planting area would be up 4 percent on-year, due to higher planting profits of corn. Corn, wheat and soy output is expected to reach 149 million tonnes, 107 million tonnes and 14.8 million tonnes in 2007 respectively

 

The corn market stayed bearish, with more sales from the government reserve systems pressuring the market. On Friday, Jilin only managed to sell about 40 percent of the 100,000 tonnes of corn it had on offer.

 

Customs figures also showed China imported 570,000 tonnes of edible oils in July, mainly soyoil and palmoil. Imports in the first seven months rose 23.9 percent to 4.27 million tonnes.