January 18, 2010


Asia Grain Outlook on Monday: China soy imports to stay high; stocks up



China's soy imports will stay high in the coming months, while the huge arrivals are likely to weigh on soymeal prices and reduce the country's demand for soyoil as the long Lunar New Year holiday approaches.


Soy imports in January were estimated at 4.21 million metric tonnes, and arrivals in the next few months will stay high as cheaper South American crops will soon become available, the China National Grain and Oils Information Center said in a report last Wednesday.


China's soy imports in December hit a record 4.78 million tonnes. As of Dec. 31, 6.85 million tonnes of U.S. soy booked by Chinese buyers hadn't been loaded, a jump of 117% from the same time last year, according to the CNGOIC.


A total of 8 million to 8.5 million tonnes of imports will arrive in January and February, said Tu Xuan, a soy analyst at Shanghai-based commodities consultancy CBI China.


"This should add pressure on domestic soymeal and soyoil prices," Tu said.


Soymeal prices in the spot market fell in the past week by CNY30-CNY120/tonne in coastal regions, and prices of new contracts for February-March delivery were CNY100-CNY200/tonne lower from a week earlier.


"As soy stocks are rising and (crushers') operation rates remain high (on decent crushing margins), slower sales are resulting in higher stockpiles of soymeal," said the CNGOIC in the report.


The decline in Dalian Commodity Exchange soy futures and spot market prices last week thinned market activity.


The crushers may have to cut soymeal prices further in the coming months on higher imports and the seasonal lull after the Lunar New Year holidays, said Tu.


A good harvest in South America that is expected to lure buyers due to price advantage is likely to further worsen the situation, said the CNGOIC in the report.


The huge imports of soy in the meantime have significantly cut Chinese demand for soyoil imports. The CNGOIC estimated soyoil imports in the first quarter will be less than 200,000 tonnes, lower than November's imports.

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