October 15, 2007

 

Two China-bound soy cargoes cancelled on poor crushing margins

 

 

Chinese crushers have cancelled two US soy cargoes amid poor crushing margins after initially surging to book soy after Beijing's announcement it would cut soy import duties.

 

Chinese traders bought more than 10 US soy cargoes recently after the Chicago Board of Trade soy futures hit a four-week low.

 

Beijing has cut soy import duties to 1 percent from 3 percent for a 3-month period to cool domestic prices and ease inflation.

 

Some traders say the soy quantities were in "historic" amounts.

 

As crushing margins are poor, the buyers could profit more by simply selling the cargoes now than bringing it to China for crushing.

 

Domestic soymeal prices fell more than RMB 200 per tonne, or 6 percent, this week after the country returned from last week's week-long holiday.

 

Demand from the livestock sector has weakened after livestock were slaughtered ahead of the holidays. Large volumes of soyoil imports also kept prices steady.

 

Soymeal demand was seen growing in coming weeks as breeders restock after the holidays. Soymeal prices dropped 6.0 percent last week.

 

Record freight rates have added more impetus to cancel imports.

 

Still, traders expect soy imports in October to be higher at 2.7 million tonnes and to top 3.0 million tonnes in November.

 

China imported 1.89 million tonnes of soy in September, the second-lowest monthly import total this year and down 35.5 percent from August, when it imported 2.93 million tonnes.

 

Imports in the first nine months rose 2.1 percent from a year earlier to 21.69 million tonnes, according to China Customs.

 

However, September imports of vegetable oils, mainly palm oil and soyoil rose 18 percent from August to 1.04 million tonnes,

 

For the first nine months of the year, imports of edible vegetable oils rose 25.6 percent to 6.18 million tonnes.