October 18, 2010

China after South American new soy cargoes

Chinese soy buyers are actively buying new South American soy crop for 2011 as crushing margins hit the highest levels of the year, according to the China National Grain and Oils Information Centre (CNGOIC).

Buyers in the world's largest soy importer have booked 25 soy cargoes so far in October for the 2011 crop, the centre said.

"Good future margins have kept Chinese buyers active in buying the new South American crop, and Chinese buyers are looking for March-to-May as well as May-to-July shipment," said the official think tank.

South American soy cargoes for March shipment will offer a crushing profit of RMB211 (US$31) per tonne, and for July shipment the margin will be RMB302 (US$45) per tonne - the highest this year or a rise of RMB200 (US$30)/tonne from the end of September, it said.

The margins are calculated based on Dalian forward-month soyoil and soymeal prices. China buys from Brazil and Argentina.

Chinese importers are also active in buying US soy cargoes and bought 280,000 tonnes for 2010/2011 shipment on Thursday (Oct 14), according to the USDA.

Chinese crushers need about four million tonnes of soy per month, which is crushed into soymeal, the ingredient for animal feed and cooking oil.

The centre also expected China's soyoil imports in November and December to fall to about 100,000 tonnes each month as compared with estimated 200,000 tonnes for October.

Imports of soyoil from South American countries offer no arbitration profit against local futures prices. March soyoil shipment of South American cargoes will offer RMB225 (US$33)/tonne in losses against forward-month Dalian contracts, it said.