In the first nine months of 2008, China imported more than 28.7 million tonnes of soy, while import level in September reached 4.3 million tonnes, igniting expectations that the country's soy import level this year will reach a new record high.

 

China's total soy import this year is projected to exceed 33 million tonnes, a record high, while the country's soy production will add in 4 million tonnes, according to industry sources.

 

Analysts said a major reason for the increase in imports was that importers wanted to bring in soy ahead of the then impending import tariff adjustment, which went into effect on October 1, rather than any significant change in soy consumption.

 

"The favourable 1 percent import tariff on soy shipments ended on Sept. 30 this year, and so domestic dealers stepped up purchases last month. September was an especially good time for importing soy given that ocean freight costs were dropping too," said analyst Xu Liang from Xinan Futures.

 

Freight costs from North America to China currently stand at US$50 per tonne, down from US$140 per tonne in the late months of 2007.

 

According to the Heilongjiang Soybean Association, the price of fresh Chinese soy on the spot market on October 15 was RMB 3,500 per tonne, higher than the cost of importing soy from other countries.

 

Xu said soy imports in October may drop by half as factories have stockpiled imported soy in September, while the recent Chinese soy harvest will also affect imports.

 

The Ministry of Commerce expects not to import more than 2 million tonnes of soy in October, and that about 1.9 million tonnes of the total would come from the US and South American countries.

 

Purchasing prices are also likely to continue falling due to declining prices of bulk agricultural products in the world, therefore farmers are expected to incur losses from soy sowing this year.

 

Sown area of soy rose sharply this year as agricultural commodity prices shot up.

 

Soy output is expected to reach 7 million tonnes in Heilongjiang Province this year, compared to 4.84 million tonnes last year, according to Wang Xiaoyu, head of the industry development department of the provincial soy association.