August 29, 2012

 

 

China faces the need to reduce its burgeoning soy imports in the coming months due to tighter supplies after droughts affect crops in the US and South America.

 

"For September 2012 / February 2013, we estimate that Chinese soy imports will have to be reduced by four to five million tonnes from the 27.5 million tonnes imported in the same six months of a year earlier," Hamburg-based oilseeds analysts, Oil World, said.

 

US corn and soy prices hit record highs this summer as scorching temperatures and a relentless drought ravaged crops in the US, while drought also caused large drops in Argentine and Brazilian soy harvests.

 

China accounted for 61% of global soy imports in the first half of 2012, Oil World said.

 

The Chinese government is likely to increase sales of state soy reserves to compensate for lower imports, Oil World said.

 

"In addition, China is likely to raise imports of Canadian canola (rapeseed) above its year-ago level in the next six months," it said.

 

It added: "The prospective steep decline in soy imports will result in a massive reduction of total Chinese soy stocks below last year's level as of end-February 2013, enforcing considerably higher imports in the second half of the 2012/2013 season."

 

This means South American crops looming in early 2013 will face major pent-up demand from China, it said.

 

Oil World forecasts Brazil's soy crop in early 2013 will rise to 82.0 million tonnes from 66.40 million tonnes in early 2012.

 

Argentina's 2013 crop is likely to rise to 56.0 million tonnes from 40.50 million tonnes, it said.