August 31, 2011

China poised to step up soy buying

China is set to increase its soy purchase due to low stocks and its smaller-than-expected soy crop, Hamburg-based oilseeds analysts Oil World projected Tuesday (Aug 30).

"Chinese purchases of soy are likely to pick up in the coming weeks and months," Oil World said. "Domestic stocks of imported soy have been reduced since early 2011 owing to reduced imports, while crushing has continued to rise."

China's January-July 2011 soy imports fell 5.5% on-year, although July imports rose 8% on-year and 24% against June 2011, official data showed on August 22. China also revealed plans in August to auction four million tonnes of soy from its state stocks.

The stock sale shows China's government wishes to stimulate more soy crushing to raise soyoil and soymeal output to curb rising food prices, Oil World said.

"Also, this year's Chinese soy crop may turn out below expectations, adding to higher import demand," it said. "Owing to reduced plantings and the recent drought conditions in some major producing areas, primarily in Heilongjiang, this year's (2011-12) soy crop may fall below our estimate of 13.7 million tonnes."

China harvested 14.6 million tonnes in the previous 2010-11 season. Oil World's estimate is already below the 14 million tonnes for 2011-12 forecast by the USDA on August 11.