September 12, 2011
China to buy half of Q4 soy from South America
China is expected to turn to Brazil and Argentina for nearly half of its soy import need in the fourth quarter amid competitive South American offers, traders said.
The world's top soy buyer is expected to take up to seven million tonnes of soy from Brazil and Argentina in the October-December period from a total estimated import demand of 15 million tonnes, compared with around five million tonnes shipped a year ago, Singapore-based traders who supply directly to China said.
China looking to Latin America, which is sitting on plentiful stocks after this year's bumper harvest, for more supplies at the year-end, typically the peak marketing season for the US, could weigh on benchmark Chicago prices.
South America is going to take up more business in the first quarter of the US marketing year, analysts said, adding that it depends on prices as Chinese buyers will go for the cheapest origin.
China's move to corner cheaper supplies from South America comes as the country's food prices jumped 13.4% in August from a year earlier, contributing four percentage points to August's inflation level.
This week, CBOT front-month soy futures slid nearly 2%, snapping four straight weeks of gains, as investors evened positions ahead of the USDA's monthly crop report on Monday.
Analysts predicted, on average, soy production was seen at 3.032 billion bushels, compared with USDA's August forecast of 3.056 billion.
Brazilian soy in China were quoted around US$595 a tonne, including cost and freight, roughly US$10 cheaper than US supplies, traders said.
USDA's ending stocks for both corn and soy also were forecast to be lower than the government's prior forecasts.
China has nearly finished buying cargoes for October shipment, taking about five million tonnes, while purchases for November and December were slow.
"October is done close to five million tonnes but there is no rush to book cargoes for November and December," said another Singapore trader.
