April 2, 2004

 

 

China Soy Buyers Sidelined By High Prices

 

China, the world's top soy importer, is making enquiries on soybeans and soyoil with prices easing off multi-year highs, but orders have been scant as buyers hold out for prices to fall further, traders said on Thursday.

 

Soy futures on the Chicago Board of Trade rallied to their highest in more than 15 years earlier this year, easing back on Wednesday after the United States projected record U.S. soy planting and reported larger-than expected stocks.

 

"We've been receiving quite a few calls for beans and oil after prices fell over the past few days," said a trader with a trading firm in Beijing. "The amounts enquired are not huge because the market is still watching prices very closely."

 

China booked three or four soybean cargoes in the past week for shipments from April to June at around 150 U.S. cents over the CBOT July contract, and has ordered around six million tonnes of the new South American crop for this year.

 

"There haven't been a lot of orders even though premiums have fallen, because soymeal demand hasn't recovered fully after the bird-flu crisis," said a second trader in Shanghai.

 

Premiums have eased on falling CBOT prices. CBOT May soybeans hit a 15½ year high of $10.63  per bushel last week, but have since slid to $9.95 by the end of Wednesday's trade. In eCBOT electronic trade front month May had recovered seven cents to $10.02 per bushel on 1179 lots traded by 1124 GMT on Thursday.

 

Chinese crushers are barely making a profit buying the oilseed at current prices even though domestic soymeal prices have risen to 3,600 yuan ($435) a tonne in key consuming regions, from about 3,300 yuan in mid-March, traders said.

 

They have been making losses of around 200 yuan a tonne in the past few months due to sky-high soybean prices and weak demand for soymeal -- an animal feed ingredient -- because of an outbreak of bird flu earlier this year, traders said.

 

About 80 percent of soybeans are crushed to make soymeal, while the rest is used to produce soyoil.

 

In the soyoil market, China has also expressed interest.

 

The country has booked as much as a million tonnes of South American soyoil to be shipped this year and has bought most of what it needs from April to July, traders said.

 

But big soyoil orders from China are unlikely in the near term because the country traditionally uses more palm oil as summer approaches, and Chinese farmers are about to reap rapeseed -- another key oil crop.

 

Soyoil prices are now quoted at $655-$660 a tonne C&F China from more than $700 a tonne in early March.

 

"We've had some enquiries over the past 10 days, but they aren't big chunks," said a third trader in Singapore. "There is some sporadic buying even for shipments as far ahead as October and November, but the amounts aren't huge."