April 14, 2010

 

China tightens soy oil import rights

 

 

China has decided to transfer the permit issuing right for Argentine soy oil imports to the Ministry of Commerce (MoC), which signals that the country intends to tighten soy oil import rights.

 

According to an official with the Heilongjiang Soybean Association, this is sure to benefit domestic soy processing enterprises and is expected to play an important role in relieving domestic soy industry plight.

 

Sharp increase in soyoil imports has caused shrinkage in the whole domestic soy industry chain.

 

The State Administration of Grain revealed that in the first two months, China imported a large amount of soy and soy oil at low prices, which had pressed down domestic soy oil and soymeal prices.

 

In 2009, the country totally imported 42.55 million tonnes of soy, up 5.12 million tonnes over the previous year, and the monthly import in December last year hit 4.78 million tonnes.

 

Meanwhile, the imported soy price slumped from RMB3,800-3,900 (US$556.64-571.29) per tonne in November of last year to RMB3,500-3,600 (US$512.70-527.35) per tonne in January of this year.

 

Industry insiders say that if the government does not take measures immediately to resolve the problem, the imported soy are likely to take up the whole domestic soy market.

 

According to agriculture department of northeastern China's Heilongjiang Province, the country's major soy production base, the province's soy planting area dropped 4% in 2009, and is forecast to decrease 370,000 hectares this year, mainly due to lower profit in growing soy than other crops.

 

Meanwhile, many soy-processing enterprises suspended production, which has further dampened farmers' enthusiasm in soy planting. Currently, the cost for purchasing domestic soy stands at RMB3,580 (US$524.42) per tonne, compared with RMB3,500 (US$512.70) per tonne for imported soy.

 

A survey by the Heilongjiang Soybean Association showed that operating rate of the province's soy processing mills has been on the mend thanks to spring sowing and the possible restriction on soy oil imports.

 

However, a MoC spokesman said that China has not prohibited soy oil imports from Argentina, and the country is still reviewing permit application for soyoil imports.

 

China was Argentina's biggest soy oil importer in 2009. The Argentina Ministry of Agriculture predicted that the country's soy output would hit new high of 55 million tonnes in crop year of 2009-10, with one fifth to be processed into soy oil and be exported to China.