March 31, 2010

China to slow down soy oil imports

China, the world's biggest vegetable oil consumer, may toughen inspection standards on imported soy oil to control shipments and absorb a domestic supply glut, a trade body said.

The country's soy oil imports jumped 65% in the first two months this year. By cutting imports of soy oil, which China mainly buys from Argentina, demand for imported soy and rapeseed oil may rise.

"If indeed only soy oil is targeted, that may help prices of imported beans. Speculation is that other oilseed products may also be targeted," said an analyst.

On the Dalian Commodity Exchange, soy oil for September delivery rose as much as 1.8% before closing at RMB7,560 (US$1,107) a tonne. The most-active contract has lost 4.5% this year.

China imported 90,000 tonnes of soy oil in the first two months this year. Total imports are projected to reach 2.4 million tonnes in the year through September, according to the USDA.

Meanwhile, soy imports are projected to reach a record 45 million tonnes in the year ending September 30. The bulk of imported soy is crushed into meal for use in animal feed and the remainder is refined into cooking oil, reported analysts.