August 11, 2008


Excessive soy imports force China to delay incoming cargoes

China has imported too much soy in July and August, forcing some Chinese traders to delay cargoes to September or to even resell the cargo, according to traders on Friday (August 8, 2008).

Traders said August soy imports are expected to reach a record 4 million tonnes, with July imports estimated at nearly the same amount.


After a sharp decline in February, China imported a record 3.58 million tonnes of soy in June, up 42.1 percent. Strong imports of soy oil have also added pressure to the margins of crushers.


September imports may be much lower, as higher prices and increasing domestic stocks have significantly reduced profits on recent purchases.


A Shanghai-based trader said about five or six cargoes have been deferred.


Soy futures in Chicago crashed to a new low as Chinese buying dried up. Chinese edible oil futures have been pressurised since early July, while soy futures have dropped 20 percent since mid-July, eliminating margins for crushers and traders with speculative imports.


The volatile market tends to hurt many people, according to a Guangdong-based trader.


Traders who face losses may find that selling back cargoes is a better option than placing them in domestic markets. Chinese crushers and traders sometimes defaulted on soy imports purchased at high prices when domestic prices fell sharply, but the number of such defaults have decreased as the sector consolidates under agricultural giants such as COFCO, Bunge, Cargill and Louis Dreyfus.


For the first half of 2008, China's soy import value reached US$10.06 billion, 1.2 times more on-year. Import volume also reached 17.23 million tonnes, up 24.4 percent on-year.

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