November 10, 2010
 

China faces growing competition for soy imports

China, the world's biggest soy buyer, will face increasing difficulty meeting its surging demand for imports as global competition for the oilseed grows, a Cofco Ltd official said.

"Crushers inside and outside China are competing for raw material," said Chang Muping, Cofco's deputy general manager of oilseed processing.

China's soy imports has jumped this year as crushers, spurred by good margins, raced to secure supply. Processors increased purchases of new-crop South American soy by 25% from a year earlier, according to the China National Grain & Oils Information Centre.

"As reflected in the pace of buying, more and more companies are buying further into future months and purchases are bigger," Chang said. While Chinese crushers once bought beans a few months before shipping, they now buy half a year or more before delivery, he said.

The premium for Argentina soy has risen as much as 60 cents above the benchmark, compared with the past when the oilseed traded at a discount of as much 100 cents below benchmark, Chang said.

The premium for US soy in the past two years has been as high as 120 cents, compared with 40 cents to 50 cents a few years ago. Brazilian supplies used to carry a discount to benchmark, and they now command a premium, Chang said.

Rising biodiesel production in soy-growing countries has left less soyoil available for export.

Soy consumption in China will climb because rising incomes mean the Chinese are eating more oil-rich foods and meat, produced using oilseed byproducts, he said.

China's per capita consumption of vegetable oil was 18 kilogrammes last year, compared with 32 kg by US residents, according to Chang. Per capita consumption of meat by rural Chinese was 21.53 kg on average in 2009, compared with 34.67 kg per urban resident. The country's domestic soy output growth is limited by declining area for cultivation and lower incomes from oilseeds compared with other grains, Chang said.