April 11, 2014
China''s soy imports likely to fall in Q3 2014
As processors cannot cover their costs with a bird flu outbreak sapping demand for the animal feed ingredient they make, Chinese soy imports could fall below 15 million tonnes in the third quarter from 18.25 million in the same period last year, traders and industry officials said.
That would likely cap a rally in global prices as it would coincide with bumper supplies from Brazil and Argentina hitting the market.
Chicago Board of Trade front-month soy edged lower on Thursday (Apr 3) after climbing to their highest since July in the last session when the USDA cut its forecast for ending stocks.
China''s stocks of soyhave swelled due to soaring imports in the last few months. The country imported 15.35 million tonnes of the oilseed in the first quarter, up 33.5% on a year earlier, according to official Customs data issued on Thursday. Imports in March were 4.62 million tonnes, marginally lower than 4.808 million tonnes shipped in February.
But demand for soymeal has been hit by outbreaks of bird flu, as well as falling pork prices, cutting appetite by as much as 20-30% in the February-March period, analysts said. As a result, soy importers have cancelled up to 600,000 tonnes of South American soy cargoes for shipment between March and May, trade sources said last month.
The country has also cancelled around a million tonnes of US corn, also used to feed animals, citing the presence of an unapproved genetically modified strain. But trade sources say the clampdown is being used to shield farmers from the supply glut and weak prices.
In January, an outbreak of bird flu in southern Guangdong province forced chicken farms to scale back on restocking, following huge losses last year after the culling of millions of birds.
Plans by Chinese authorities to sell state reserves in May could add to the glut in soy supplies, further denting imports.
Beijing will have stockpiled more than three million tonnes of domestic soy this crop year when the programme ends in April. It also holds 2-3 million tonnes from the 2011 harvest and 800,000 tonnes from the 2012 harvest, analysts said.
Crushers are losing RMB500-600 (US$81-97) for processing a tonne of soy, compared with a RMB600 (US$96.60) profit in the fourth quarter of last year during peak consumption and when some shipments were delayed.
The fat margin in the fourth quarter prompted China to purchase 27.7 million tonnes of US soy so far in the current marketing year to August, 2014. China bought a total of 21 million tonnes of US soy the year before.
In addition to the purchases from the US, Chinese buyers have also booked more than 20 million tonnes of new-crop South American beans.