September 10, 2008

Total Chinese oilseeds production is expected to be 6 percent higher in marketing year 2008-09, while new soy projections are significantly higher than last year, the USDA Foreign Agricultural Service (FAS) said.

High levels of imports and declining global oilseed product prices have recently led to a rapid decline in Chinese vegetable oil prices, the FAS said, with soy oil prices experiencing a 21-percent price drop in the last month.

Total Chinese domestic oilseed production for 2008-09 is expected to reach 56.2 million tonnes due to a rise in soy and rapeseed production.

This is 3.4 million tonnes more than the adjusted total oilseed production of 52.8 million tonnes in 2007-08.

The China National Grain and Oils Information Center (CGNOIC) also recently raised its projected Chinese 2008-09 soy production to 17.5 million tonnes, an increase of 37 percent over their 2007-08 estimate.

Demand for oilseed products continues to grow as prices decline in China, the FAS said. Its 2008-09 soy imports are forecast at 38 million tonnes, up 7 percent from the estimated 35.5 million tonnes for 2007-08.

Total soy imports for 2007-08 are expected to be 500,000 tonnes higher than the July estimate. As of the end of July, 2007-08 soy imports were 30 million tonnes, up 24 percent over the previous year.

Soy imports in August are estimated at 3.4 million tonnes, while September imports are expected to be 2.5 million tonnes.

Additionally, 2007-08 soy oil and palm oil imports are also expected to increase by 500,000 tones and 400,000 tonnes, respectively, from the 2.4 million tonnes and 5.1 million tonnes in the previous year.

Meanwhile, China's corn production is rising as well. A bumper crop is expected in northeastern China for 2008-09 and crop conditions in the major production provinces are above the five-year average.