September 20, 2011


China's 2012 soy imports seen to lift 5%


China's soy imports will rise at least 5% to about 57 million tonnes next year, fuelled by growing demand from the livestock sector and the country's emphasis on corn self-sufficiency, the American Soybean Association said Monday (Sep 19).


This compared to 53-54 million tonnes this year, said Danny Murphy, treasurer at the American Soybean Association.


"Their pork (industry) is a huge consumer of corn and soymeal ... Their poultry industry is developing and increasing demand," he added.


Global 2011-12 soy production is likely to reach about 265 million tonnes, Oil World forecasts, with the US 2011-12 soy crop likely to fall to 88.5 million tonnes from 90.6 million tonnes in 2010-11.


Around 90 million tonnes of soy is traded across the world. The US consumes about 45% of the soy it produces, mostly used by the livestock industry, with the remainder exported, said Murphy.


Close to 60% of US soy exports go to China, with the next largest markets being Mexico, Japan and Taiwan.


Last week, the USDA estimated soy production at 3.085 billion bushels, compared with trade estimates for 3.032 billion bushels and its August estimate of 3.056 billion.


"China is trying to make themselves self-sufficient in corn - so they have put more emphasis on corn production and have reduced their soy acres," said Murphy. "Over the last four years, they have probably reduced soy production in China by 3-4 tonnes."


Strong demand from developing Asian countries like China, the world's second largest corn consumer, coupled with the hottest summer in over half a century in top producer the US, are both seen as bullish for corn prices.


"So far, some of the early harvest reports out of the Midwest, are that corn is better than they expected," Murphy said. "This is in the first week of harvest, so whether that holds up, remains to be seen.


Concerns about tight stocks of corn in the US, the world's biggest supplier, has pushed Chicago Board of Trade corn futures to historic highs.


Front-month corn futures hit an all-time peak in June just below US$8 a bushel. The benchmark December contract was at US$6.92 a bushel at the close on Friday.


"We may not have seen the highs yet in corn, but that depends on the economic report from the United States and other developed countries," Murphy said of the 2011 price outlook.


On the 2012 benchmark corn price outlook, he expected prices staying in the US$7 plus range provided there are no major economic downturns.


"As you approach $8, it's hard for livestock feeders to pay much over $8, so I don't foresee it going much higher than that," he added.

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