China’s 2012-13 soyabean imports seen at six-year low
November 24, 2012
China’s soyabean imports will grow at their slowest pace in six years this marketing year as sluggish demand and poor crushing margins dent purchases by the world’s top buyer, a Reuters poll showed. China, which buys 60 percent of the world’s traded soyabeans, is likely to import 61 million tonnes in the year to September 2013, a gain of just 3 percent from a year ago and 3 percent below a US Department of Agriculture (USDA) estimate.
A slowdown in China’s soyabean imports, coupled with expectations for bumper production in South America early next year, could pile more pressure on benchmark US futures. The market has slid more than 20 percent since hitting a record top of $17.94-3/4 a bushel on September 4.
“We are very pessimistic about demand,” said Li Jianlei, a senior researcher at COFCO Futures, a unit of state-owned farm trader COFCO. “I think demand from the livestock sector will decrease after the Lunar New Year.” Chicago soyabean futures plunged to a five-month low last week, dragged down by news of Chinese importers cancelling 600,000 tonnes of US soyabeans after a drop in prices made purchases unprofitable.
China’s soyabean imports grew more than 13 percent in the year to September 2012. This year’s growth of around 3 percent, according to a median forecast of 15 analysts and traders, will be the slowest since 2006/07. The increase in import prices this summer contributed to the losses in the soyabean crushing industry, which is also grappling with overcapacity and a decline in domestic demand for products such as soyaoil and soyameal.
Crushers are losing 200 to 300 yuan for every tonne of soya they process into soyameal and soyaoil. They have been making losses since October. Chinese oilseed processors will reduce purchases following the Lunar New Year break early in February, after having booked large volumes of expensive soyabeans in recent months.
“Imports between May and September will increase, but not more than 6 million tonnes each month, so, for the whole year, imports will almost match last year,” said one analyst at the China National Grain and Oils Information Center, who declined to be identified as he was not authorised to speak to the media. Investors in the soyabean market are bracing for near-record production in South America that could drag the market lower, given the slowing Chinese demand.
Brazil, the world’s second largest exporter, is forecast to produce 81 million tonnes of soyabeans in 2013, the USDA says, up 22 percent from 66.5 million. Argentina’s output has been estimated at 55 million tonnes up 34 percent on the figure of 41 million a year ago. Still, some analysts expect imports to rise faster. “We are pretty much in line with USDA’s estimate,” said Victor Thianpiriya, an agricultural strategist at ANZ in Singapore, who forecast imports at 63 million tonnes. “If you look at the pace of imports so far, that is the kind of growth you see.”
US government data show China has bought 16.4 million tonnes of US soyabeans so far in the marketing year that began on September 1, 2012, 7.7 million tonnes of which has been shipped to the country, leaving 8.6 million tonnes on the books. China’s imports of soyabean could rise in the weeks ahead as the country temporarily halted the sale of state reserves to focus on stockpiling its domestic soyabean crop.