China soy buyers focus on new South American crops

 

 

US soy futures closed sharply higher on Monday on a slowdown in the US harvest bad weather worries.

 

A trader from an international trading house said Chinese buyers have bought 12 or 13 South American cargoes, many of which are for May shipment. Crushing margins have improved a lot, he added. At 55,000-60,000 tonnes per cargo, that would work out at 660,000-780,000 tonnes in total.

 

Another trader said big crushers had already booked more than half of the new South American cargoes they would need, having bought more than 5 million tonnes already, all for shipment after April. Another trader said for US soy, crushers have not finished their purchases for December and January shipment as they are still buying but more willing to wait because of high premiums.

 

Low soy imports in September and also expected for this month have driven up domestic soymeal and soyoil prices as business resumed after the 10-day National Day holiday in the first week of October. In addition, many crushers shut down over the holiday, leading to tight supply of the feed ingredient, particularly in coastal areas in the north, traders said.

 

Gao Chulai, an analyst with a feed industry web site www.chinafeedonline.com said about 80 or 90 percent of crushing facilities were shut down during the holidays and some remain closed due to lack of soy over low imports in October.

 

Traders said October imports were expected to be even lower, with one estimating the figure at only 1.5 million tonnes. September imports were at about 2.5 million tonnes. That compares to around 3.5 million tonnes that crushers need to run normal operations for a month.

 

Still, traders said the tightness in supply could ease at the end of the month when large cheap US soy cargoes arrive on the market.

 

China's soy imports will pick up from November and December, with each month at about 4 million tonnes, traders said.

 

Despite low imports in October, traders said crushers in the north may not be willing to take soy from state reserves as Beijing's prices were too high for them to make a profit.