August 28, 2007

China soy production could hit lowest level in 15 years

China's soy production this year is likely to fall to the lowest level in the last 15 years, due to severe drought in northern China, where most of the crop is grown, Credit Suisse said.

Credit Suisse, citing figures from a research agency, said soy production in China may reach 12.9 million tonnes, 17 percent lower than in 2006.

The drop is likely to cause China to import more soy, already at high levels in recent years.

China is expected to import a substantial amount of soybean over the next year, Credit Suisse said.

China is the world's largest soy consumer and the fourth largest producer. Brazil and the US are the main suppliers of soy to China, the latter accounting for more than half the value of China's soy imports.  China's soy imports from the US shot up 51 percent in the first half of this year, compared with the same period in 2006.

China has announced it has discovered problems with US soy last week, possibly in retaliation for the many problems the US has found in products made in China.

China's General Administration of Quality Supervision, Inspection and Quarantine said the problems include the presence of sorghum halepense and other harmful weeds in shipments.

However, no plans have been made so far to place restrictions on US soy.