July 13, 2009


Long term Asia soy outlook bullish; China stocks may drag


The long-term demand situation for soy and soy products in Asia remains bullish even though China's ballooning state soy reserves may weigh on the market in the near term, according to a senior industry official.


"The demand for animal feed and oils in Asia, notably Vietnam and Indonesia, is growing at a steady pace. Vietnam, for example, has seen its consumption grow around 20 percent a year for the last six years due largely to a growth in demand for swine and aqua feed, while China now accounts for around 50 percent of the world's soy market," said John Lindblom, Asia regional director of the US Soybean Association.


"The long-term outlook for soy products in Asia is bullish, though China will have to start releasing its stockpiles at some point," he added.


Chicago Board of Trade soybean futures have rallied in recent months on the back of tight old crop stocks in the US and robust buying by China.


Recent estimates by China's Ministry of Commerce suggest China may have imported 4.23 million tonnes in June; the ministry had previously said China's imports in May reached 3.52 million tonnes, a 1.2 percent rise on year.


Last Thursday, the ministry revised up its estimates for July soy imports to 4.28 million tonnes, from 3.56 million tonnes.


"China's reserves could set a bearish tone in the near term. (China is) buying more than it can consume. It all depends on how and when they will release their stocks," Lindblom said.


"Going forward, however, there's good demand in Asia and soy here are scarce. Indonesia, for example, consumes a lot of soy but yields are very low in Asia compared to the US The average yields in Indonesia currently are around 11 bushels per acre compared to around 40 bushels per acre in the US." 

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