August 26, 2008

High import costs to sink Taiwan's soy shipments by 8 percent

Taiwan's soy imports may fall around 8 percent this year to 2.2 million tonnes as high import costs lead to a slip in demand, a purchasing manager with one of Taiwan's biggest soy processing companies said Monday (August 25).

"Soy crushers aren't able to pass on the rise in import costs of soy to end users entirely, so they are cutting back on imports," said Leon Chen, manager at TTET Union Corp., a major Taiwanese soy crusher.

Leon said that in order to cut costs, Taiwanese soy crushers have also switched to buying soy in smaller containers that are traditionally used to carry non-grain items such as textiles or electronic goods.

"It's too expensive to import soy in 55,000-tonne panamax-sized vessels. Since there's a lot of trade between Taiwan and the US, it's cheaper to use smaller containers for importing soy," said Leon.

However, since container traffic between Taiwan and South American countries such as Brazil and Argentina normally isn't too heavy, Taiwan is now mostly buying soy from the US.

Leon added that the landed cost of US soy in Taiwan has fallen around 13 percent over the last month to a premium of around $3.30 a bushel over the Chicago Board of Trade's November contract.

However, Leon said traders expect soy prices to fall further over the next few months and therefore are in no hurry to stock up.

Of the expected 2.2 million tonnes of soy imports this year, around 1.3 million tonnes had already imported in the January-July period.