October 28, 2003
China Soy Markets Quiet As Participants Eyeing Government Action
China's soy markets have been quiet so far this week, with most participants closely watching for possible government intervention and any signs of increased supplies, local traders and analysts said Tuesday.
"Top Chinese government officials are very concerned about the broad rally in the grain and oils markets in October and might take some measures to curb the rampant speculation in the markets by releasing more state-owned stocks," an analyst from a local brokerage house in Beijing said.
There is talk that China's State Development and Reform Commission will hold a special meeting in the coming week to discuss the rallying grain and oils prices, and consider taking some measures to cool down the markets.
As of Tuesday, the prices of imported soybeans at the ports in China were quoted around 3,250 yuan ($1=CNY8.277) a metric ton, largely unchanged from prices late last week.
Soymeal prices have also been largely unchanged in the past few days, quoted around CNY2,900/ton in eastern China.
Since October, the grain and oils markets have rallied strongly, led by sharp increases in edible oil prices, as local crushers and millers scrambled for supplies amid concerns over tighter supplies.
"It is a very delicate issue, as I don't think the Chinese government could have much physical means to pressure the markets any lower. It is impractical to use the minimal state-owned soybean or soyoil stocks to alleviate the supply shortage," said the analyst in Beijing.
"But the point is, China's government could change its attitude toward imports - that's what really matters," he said.
As of Tuesday, most of the soybean cargoes set to arrive in November have been issued key import licenses, opening the door for smooth unloading in the coming weeks, traders said.
The three or four soybean cargoes that have already arrived are likely to get the green light to unload soon, said traders.
"China's government is speeding up the processing of applications for imports, a rare move if you look back at the situation in the previous months, when quarantine authorities dragged their feet in issuing import licenses," a trader from a Hong Kong-based oilseeds company said.
Booming crush demand and stagnant local soybean output are to be blamed for the soaring imports, added the traders.
In the October 2003 to September 2004 marketing year, China's soybean crush usage is forecast at 28.3 million tons, compared with 25.96 million tons in 2002-03, according to the U.S. Department of Agriculture.
SOYOIL IMPORTS FORECAST TO INCREASE
The prospect of higher arrivals of imported soybeans and soyoil in early November put a lid on the local soy markets, said another trader from a local grain trading company in Beijing.
About 60,000 tons of crude soyoil are expected to arrive at the port of Tianjin, northern China next week, and the arrival date is around Nov. 3-6, said the trader.
In October and November, China is expected to receive a monthly average of 250,000 tons of imported soyoil and at least 400,000 tons in December, the trader said.
In the 2003 calendar year, China's soyoil imports could reach 2 million tons, said the trader.
