September 23, 2003



China Import Rule Lax As Soybean Supply Wanes


China is once against looking to import US soybeans, as traders disclose that the world's largest soy importer might the world's top soy importer will remove import barriers by year end.


They said quarantine authorities, known also as CIQ, had issued a batch of import permits late last week, allowing all but one vessel to start clearing soy cargoes before the country's new import regime took effect on September 21.


China is estimated to have 3.4-4 million tons of U.S. soybeans ready for shipment between December and January, after a recent purchased of 6-10 cargoes last week. The figures also include purchase of the oilseed by the Wilmar group, China's biggest single crusher.


"Most of them are buying December and January. For late shipment, they are confident about CIQ," said a trader at an international house based in Shanghai. "It's expensive. But they are still buying...There's a long way to go for China."


The traders said the latest deals were sealed at 140-150 U.S. cents per bushel over the Chicago November or January contracts.


China has been slow in purchasing soybeans from the U.S. new crop due to uncertainties over Beijing's policy following trade disruptions ahead of the domestic harvest that starts early next month.


In the previous 2002/2003 crop year, China bought about seven million tonnes of soybeans from the United States, including about 4.7 million tonnes shipped between October and December.


Apparently, Chinese buyers had been encouraged by the CIQ, say traders, which has been slow in approving import permits (IPs) since July. Some ships had to wait up to 40 days at Chinese ports before unloading soybeans.


"Most of the vessels that arrived over the past two weeks have received IPs," said another trader based in Beijing. "Because of the release of licences I believe most of the buyers have confidence to import."


Custom data released on Monday showed Chinese August soy imports totalled 2.45 million tonnes as traders tried to stock up for fears of disruptions from the switch in China's interim rules on genetically-modified (GM) crops on September 20.


Domestic prices for soymeal are on the rise as zero deliveries are expected in the next few weeks. Chinese buyers were reluctant to become the first to bring in foreign soybeans under the new rule, say traders.


In the vegetables oils market, the traders said China had washed out -- or sold back to suppliers at a fee -- as much as 100,000-150,000 tonnes of South American soyoil mainly for October shipment following a recent meeting of Chicago futures, with traders responding by lowering their estimates for 2003 imports to 1.8 million tonnes from about 2.0 million before. Said one Shanghai trader. "Because of the Chicago rally, they wanted to lock in the margins. Quota prices are very high."


Soyoil prices had increased to about $560 per tonne, C&F China, compared with the previous booking price of $500-$515. August soyoil imports were 245,046 tonnes, pushing up the total for the first eight months to 909,035 tonnes, up 337 percent from the same 2002 period.