November 25, 2003

 

 

China Switch to South America Soy

 

China has delayed some U.S. soy cargoes to the next South American crop as domestic soymeal prices fall further due to heavy arrivals of foreign beans, traders said on Monday.

 

Though the quantity in question may not be as large as the 300,000 tons rumored in Chicago, more buyers might try to avoid purchasing high-priced U.S. soybeans, they said.

 

"I am not sure about the quantity, but I believe there has been a switch," said a trader based in Shanghai.

 

"Given the price difference, buyers prefer to delay shipment a little bit, and try to get shipments from South America."

 

Traders said the meal market had turned bearish. While feed mills were trying to cut down inventories, many U.S. soy cargoes were arriving in China after a delay of more than a month.

 

Data compiled by Xinhua Guoxin Information Service Co Ltd showed about 13 Panamax-sized U.S. soy cargoes arrived at 10 northern ports alone in the week to November 24.

 

Traders said domestic soymeal prices had come down to around 2,650 yuan per tonne ($320) in the consuming south, compared with a peak of about 3,400 yuan ($411) following a sharp rally in October due to trade disruptions.

 

MORE TRADE BUMPS?

 

This had sapped interest among Chinese buyers to book more soybeans, particularly in the wake of a simmering trade row between Washington and Beijing prompted by a U.S. decision last week to impose an import quota on some textiles from China.

 

"If they can't solve the textile issue, I fear CIQ (quarantine authorities) will become slow again in issuing import permits," said another trader.

 

But a government analyst told Reuters: "The textile issue is unlikely to have an impact on China's soybean imports."

 

He said he planned to raise China's 2004 soy import forecast to 24 million tons from 22 million tons as Beijing would place no obstacles on soy imports.

 

The country's 2003 soy output was revised downwards to 16 million tons from 16.5 million tons.

 

USDA put Chinese 2003/04 soy imports at 22 million tons, versus 21.42 million in 2002/03, and output at 16.20 million tons against 16.52 million tons previously.

 

Traders said in addition to arrivals of foreign soybeans, estimated at around 1.2 million to 1.5 million tons in November and 1.5 million to 1.8 million tons in December, domestic beans had also been shipped to the south.

 

"The supply is abundant," the first trader said. "I think there is more downside to meal prices, though not too much."

 

Traders agreed domestic soymeal prices should stabilise at around 2,500 yuan ($302) per ton as China needed to stock up again ahead of April 20 when the current import rules for transgenic crops expires.