September 5, 2007

Indian soymeal becomes more attractive as China's feed demand picks up
 

As China's hog sector stages a strong recovery from the blue ear disease, its traders are turning to  India for soymeal as freight rates of cargoes from the US hit records.

Chinese industry officials said the country had booked 70,000-80,000 tonnes for shipment between October and November, at US$310-$330 a tonne, including cost and freight.

Grains traders in China's Guangdong  province said the price difference between Indian soy and that from the US is making the former more attractive to buyers.

China would likely book another 100,000 tonnes from India before the end of the year, if prices did not surge further, he added.

Costs for bringing soy from the US Pacific North West have more than doubled since the start of the year to well beyond US$100 a tonne. Imports from the US Gulf would be even dearer.

Even though China's soymeal prices are heading up ahead of the National Day holidays early in October, traders are not willing to pay the premium for US soy.

A second concern is the tighter inspections that has been going on since China accused the US of sending substandard soy shipments. The inspections have caused delays in several shipments and stirred worries that soy shipments from the US may be turned back.

As demand is recovering, supply is having difficulty catching up and soy supplies are expected to be low in September and October.

Traders said while Chinese meal demand was picking up faster than expected, soy arrivals in September and October were would be low as the industry had scaled down purchases a few months ago, when feed demand was still languishing. 

Demand for animal feed is recovering both in the poultry and hog sector as high meat prices have encouraged farmers to stock up on chickens and pigs, they added.