December 10, 2009

Chinese soy has an edge in the coming year

Higher global soy prices and the Chinese government's soy purchase subsidies will make local soy more attractive than their global counterparts in early 2010.

Northeast-produced soy will be CNY150-CNY200 a metric ton cheaper than imported soy if transported to the country's middle consumption areas, based on an import cost of CNY3,970/ton for January shipment, according to the China National Grain and Oils Information Center (GNGOIC).

Meanwhile, global soy prices are unlikely to fall much by February, when large amounts of South America soy will enter the market, leaving local soy at a price advantage.

The government set a minimum purchase price for soy at CNY3,740/ton this year and provides a subsidy of CNY160/ton for purchases by local crushers.

China's soy imports in December and January are likely to be 4.6 million to 4.8 million tons and 4 million to 4.5 million tons, respectively, it said.

The December import estimate is much higher than the Ministry of Commerce's earlier forecast of 3.87 million tons.

Higher soy imports in the coming months have also raised concerns over falling soy prices, it said.

Soy imports in early 2010 are likely to fall due to lower imports from South America, which saw soybean output fall sharply this year, said CNGOIC.

Monthly soy oil imports in the first three months of next year are estimated to average 56,000 tons, far lower than the monthly average of 195,000 tons in the first 10 month of this year, according to CNGOIC.