As farmers increase domestic corn production which bodes well for import demand, acreage devoted to soy in China is lower in 2012 for a third successive year, although the rally in soy prices fuelled by the US drought may dampen the pace of imports over the coming months.

Record high US soy prices have seen Chinese crushers increasing their off take from weekly auctions from Chinese state reserves. A record 402,400 tonnes was bought by crushers from the government s weekly auction last week (Reuters). China's vegetable oil import figures also reflected strength in July soyoil imports at 203,000 tonnes were at their highest level since July 2011 and up by 78% on month (although down 22% on year). Palm oil imports at 472,600 tonnes were up by 20% on month and at their loftiest level since March this year but down by 8% on year.

Meanwhile China's cotton imports at 405,800 tonnes were down 15% on month though still up by 158% on year while exports of 1,700 tonnes were sharply below June's 5,900 tonnes (a high since May 2011). This took net cotton imports to 404,200 tonnes their weakest level since January this year.

The China Customs agricultural trade data for July exhibited broad based strength with only cocoa and cotton imports posting a month on month decline. On an on-year basis cocoa palm oil and soyoil imports were lower. Meanwhile the strength in China's July corn sugar soy and soyoil imports was notable. China's corn imports rose for a third month in succession with July imports coming in at 721,500 tonnes up by 318% on year and at their loftiest level since January this year.

Exports were also higher up by 27% on month at 4,300 tonnes but down by 57% on year. This meant that on a monthly basis China was a hefty net corn importer in July at 717,000 tonnes. China's wheat imports were also higher in July at 251,500 tonnes up by 16% on month after having declined by 61% month on month in June (from May s record highs of 556,600 tonnes).

In soy China's imports in July continued the uptick that has been in place since March. Soy imports at 5.9 million tonnes were the second highest on record second only to June 2010's 6.2 million tonnes which was the all-time high for imports. China's year-to-date soy imports are up by 20% on year after 2011's subdued levels which posted the first on year decline in imports since 2004.