February 22, 2006

 

China expected to import more soybeans this year
 

 

China's soybean imports are expected to continue its increase this year, following a decade-long of expansion.

 

Soybean prices are likely to fall over the first five to six months of this year, but a rebound is expected in the long term, says Tang Yi, an analyst with Beijing-based Capital Futures.

 

China's demand for imported soybean is determined by the demand for soymeal, which accounts for about 70 per cent of soybean processing output.

 

China consumes over 1.5 million tonnes of soybean meal every month. Although soybean processing is now running over capacity, it still sometimes falls short of  supply.

 

Tang predicts that China will need 4 million tonnes more soybean in 2006 than in the previous year, or a total of 29 million to 30 millions tonnes.

 

Last year soybean imports stood at 26.6 million tonnes, up 31.4 per cent from the year before, according to statistics published by the General Administration of Customs. China's soybean oil output stood at 5.5 million tonnes, with imports at about 2 million tonnes. Total soybean oil consumption reached approximately 7.5 million tonnes.

 

Global soybean prices started to rise last February and have remained higher than 2004, despite price cuts since last August.

 

Robert P Aspell, who leads Cargill's business unit in the Grain and Oilseeds Supply Chain in China and South Korea, says he is confident that Chinese soybean consumption will grow, although a possible growth slowdown will make it difficult to maintain the previous pace.

 

There are changes to China's consumption habits and there is now a shift towards higher consumption of animal and plant protein

 

However worries about bird flu is overshadowing this optimism, especially with regards to the poultry industry a major soymeal consumer. Many experts see the development of bird flu as the biggest threat to global soybean prices.

 

Bird flu has also increased the risks of cattle raising and caused a panic that hurts the meat market says Zhou Weibing a futures market expert. However epidemic diseases will not significantly influence the supply and demand for soybeans as people are not likely to change their diets overnight. The influence of bird flu on soybean meal should be temporary, he said.

 

Zhou believes that the poultry industry is likely to recover and grow further in 2006, because conditions have improved since last December.