October 31, 2003
China Bought Up to 10 Soy Cargoes From US & South America; Continued Hike of Grain Prices
China has bought up to 10 soy cargoes from the United States and South America so far this week, with domestic grains prices resuming their climb despite Beijing's attempts to stop it, traders said on Wednesday.
Unlike in the past, record freight charges and Chicago futures at six-year highs have failed to dampen Chinese appetite for foreign beans, with domestic speculators pushing up Dalian futures to levels not seen since mid-1996.
"There is very strong demand," said a trader at an international house based in Shanghai.
Traders anticipate that China was still in the market to buy more soybeans.
The trader and others agreed China was set to buy more than eight million tonnes of U.S. soybeans this season, compared with around 7.5 million tonnes the previous season, despite sky-high prices. So far, it has booked about 4.8-4.9 million tonnes.
Just in the past three days, China had booked 4 - 5 U.S. cargoes for shipment in January and February at premiums between 200-210 U.S. cents per bushel over the Chicago March contract.
They said they had heard China had purchased another 4 - 5 South American soy cargoes for shipment in May, June and July. The premiums were seen around 150-170 cents. It now had at least 20 cargoes from the new South American crop on the books.
Reflecting the bullish sentiment, the Dalian most active October contract was trading above 3,400 yuan ($410), compared with around 3,320 one week ago and 2,900 yuan at the end of September before one-week national holidays in China.
CANOLA DEALS, OILS ALSO SOUGHT
With few soy cargoes expected in China until late November, due to a change in import regime on September 20, the traders said domestic prices for soy complex began rising again despite a short respite this week after intervention by Beijing.
Concerned over the accelerating soy complex prices, which has also set fire in other grains and food prices, the government last week told major crushers to lower prices for soyoil and soymeal meal, a major protein source for animal feed.
"The government intervention had very little impact of less than one week," said another trader in Shanghai. "The soy prices are still going up."
The trader said physical soymeal prices moved back to 3,000 yuan per ton ($362) from 2,900 ($350) in consuming southern and coastal provinces, while crude soyoil prices were stable at around 7,000 yuan per ton, down slightly from around 7,200 late last week.
The traders said China was also trying to buy some rapeseed oil from Canada or Europe after using up most of soy oil import quotas under a tariff-rate-quota system (TRQs).
Still, it might not be easy as TRQs were divided into small lots among many parties.
The second Shanghai trader saw a European rapeseed oil deal for 5,000 tons for November at around $555 per ton, C&F.
They expected Chinese soyoil imports to surge to 2-2.1 million tons this year, compared with 1.20 million tons during the first nine months and 870,275 tons in 2002.