July 3, 2008

 

China to consume half of '08 world soy exports

 
 

China is set to gobble 45.2 percent of all soy exports worldwide this year while international prices look set to climb, forecast industry insiders at the China International Oils & Oilseeds Industry Summit in Qingdao last week.

 

According to the US Department of Agriculture's estimates, China's soy imports will reach 34 million tonnes for the 2007/2008 production year, accounting for 70 percent of global soy consumption of 48.3 million tonnes. The US estimates are a little higher than Chinese estimates, which assume China will import 33.5 million tonnes of soy in the 2007/2008 production year. However, both estimates do acknowledge that at least two-thirds of China's soy demand will have to be met by imports.

 

China will primarily source its soy from the United States.

 

China has accounted for 34 percent of global growth in demand for soy over the last decade, as well as 40 percent of global growth in oil consumption and 30 percent of global growth in soymeal consumption over the same period. Over the 2006/2007 production year, China imported 28.7 million tonnes of soy, accounting for 41 percent of global soy import volume.

 

Analyst Liu Peng of Heilongjiang Longma Consulting Co. Ltd., said China's soy import rate will grow by approximately 10 percent annually from 2007 to 2012.

 

At the conference, American Soybean Association consultant Robert Bresnahan said that corn and soy prices will hold up until a production volume is guaranteed this year. He added that La Nina could cause higher prices for crops.

 

Other industry exerts also expect China to face a larger-than-ever bill for its soy imports this year. As the production of biofuels and other chemical products from grains increases, fuel price changes will be reflected more in grain prices. In June, crude oil broke US$139 per barrel, at which time corn for fuel production had a value of $334 per tonne, wheat for fuel production had a value of US$367 per tonne and vegetable oil as a fuel source had a value of US$830 per tonne.

 

Rob Joslin, vice president of the American Soy Association, said all agriculture commodities will be worth "far more than they did two years ago", hence, "food and feed commodity prices can't fall significantly unless petroleum prices fall sharply."

 

American farmers also are committed to producing the volumes of quality soy that China may require in the future as they know China's importance as a customer of US soy, said Curt Raasch, head of the family-run Raasch Farms and former chairman of the United Soy Board.

 

The United States is committed to being a reliable supplier to the world while other grain and soy exporters have begun setting food and feed export restrictions to combat high domestic prices, he said. Several Asian and African countries, China included, have imposed export bans or restrictions.

 

However, despite experiencing sharp rises in domestic food prices itself, the United States has not yet imposed any export restrictions on soy or other agricultural commodities

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