December 10, 2010

 

China defers US soy amid poor crushing margins

Some Chinese soy buyers are trying to delay shipment of their booked soy cargoes from the US after Beijing's crackdown on rising food prices eroded into crushing margins, traders said Thursday (Nov 9).

 

Traders said they had not heard of any cancellations as had been expected by some in the Chicago market, although some trading houses have resold cargoes to crushers in the eastern provinces, which enjoyed better crushing margins than those of loss-making crushers in the north.

 

"More cargoes are likely to be delayed for shipment. Some plants have stopped operation. We had also tried to delay some of our cargoes," said one trading executive.

 

"Current crushing margins are poor because the government is capping the (soyoil) price rise and soymeal stocks are under pressure from slow sales," said the executive.

 

Beijing, worried that high food prices could spark social unrest, particularly with the approach of traditional festivals, has asked oil plants not to raise the prices of edible oils until March.

 

Poor crushing margins could reduce imports by the world's largest importer from February onwards.

 

China's soy imports in December were seen to be flat with November at 5.3 million tonnes each month while January arrivals could be about five million tonnes, said the China National Grain and Oils Information Centre (CNGOIC).

 

"Some have been sold to Lianyungang (in Jiangsu province). Few crushers are taking soy here," said one trader in Shandong, which lies further north and is the largest soy importing province. Slow sales of soy at ports amid large new arrivals have congested ports in the province, the trader said.

 

Another Shandong trader said some trading houses were selling US soy at ports at about a 10% discount, which made new orders of US soy unprofitable.

 

About 1.4 million tonnes, or about one third of China's total imports, were expected to arrive in Shandong this month, about the same volume as last month, traders estimated.

 

The China National Grain and Oils Information Centre (CNGOIC) estimated current soy stocks at ports all over the country were as high as seven million tonnes, enough for one and a half months of consumption.