November 04, 2003

 

 

Chinese Buying of Soybeans Slow Down 

 

China has started looking for soyoil orders for next year, but high international soybean prices seem to have slowed down China's search for the oilseed, at least for the time being, traders said on Monday.

 

Many enquiries have been heard for soyoil arriving in early 2004 as Chinese buyers become more confident of acquiring import quotas (TRQs), totalling 3.12 million tons before January 2004, the traders said.

 

A couple of traders added that some cargoes were traded late last week, including 10,000-20,000 tons of South American soyoil for nearby shipment at prices around $640-$660 per ton, C&F China. Chinese buyers have hardly any quotas left for 2003.

 

Still, most doubted China had begun booking soyoil for 2004, saying there was too much uncertainty about the direction of Chinese domestic vegetable oil prices.

 

Just in November and December alone, it's speculated that up to 800,000 tons of soyoil may arrive in China.

 

"We see a lot of enquiries floating around for January, February, March. But indicated prices are $5-$10 (per ton) below the market," said an oil trader at an international house.

 

"Palm oil will be less favoured until at least March, if not April...Open interests could be easily 100,000-150,000 tons," added the trader based in Singapore.

 

South American soyoil for January to March shipment were seen offered at $620-$635 per ton, C&F.

But another trader in Shanghai said: "We can't find huge demand for January to March...Most traders are very bearish on domestic oil prices. They are already too high."

 

The Shanghai trader pointed to a fall of about 100 yuan in domestic soyoil prices to around 7,000 yuan ($845) in eastern China after they had stabilised at high levels for the past 10 days.

 

NINE MILLION TONS OF SOYBEANS

 

In the soybeans market, the traders said China was taking a break following a shopping spree that helped push Chicago soy futures to a fresh six-year high early on Monday, along with U.S. stocks shrinking to multi-year lows.

 

"Prices are very high...I think buying will continue, but the pace may slow down," said one oilseed trader in Shanghai, adding January cargoes were seen at 230 U.S. cents per bushel over the Chicago March contract.

 

The traders expected China to buy another 2.5 to three million tons of U.S. soybeans in the current season after booking about six million for up to February shipment. Last season recorded a purchase of 7.5 million tons of soybeans.

 

"They bought up to six million tons now. So another three million to go. They are targeting nine million," said one of the most bullish traders based in Singapore.

 

They said quarantine authorities (CIQ) had issued another batch of import permits last week, allowing the first three cargoes being discharged since September 20 following their arrivals last week.

 

The traders said China had bought a few more cargoes from the South American new crop for shipment in May, June and July last week, pushing up the total account to around 30 cargoes. They were quoted at C&F premiums 150-180 U.S. cents per bushel.

 

Yet with freight rates at historic highs of around $55 per ton, many sellers were reluctant to commit themselves to such distant positions, despite interest from buyers, they said.

"It's a different ball game: they don't want to quote so far ahead," the Singapore trader said. "The freight is a bit of a problem...Sellers do not know how to quote."

 

The traders brushed aside as a special case two South American soy cargoes stuck at Guangzhou port for more than two months due to complications between the CIQ and the buyers.