Soy Demand Said Slowing

China’s purchases of U.S. soybeans have been very strong early in the 2004-2005 marketing year, but reports indicate Chinese import demand has slowed due to tumbling domestic soymeal and soyoil prices.

Chinese traders told Reuters News Service on Monday that crude soyoil prices had lost 200-300 yuan ($24-$36) per metric ton as there had been no difficulties in discharging soyoil cargoes so far, despite new quality standards that took effect Oct. 1.

Soyoil imports surged in September as buyers tried to stock up amid worries over possible trade disruptions due to the rules. The traders said enquiries had dried up for Argentine soyoil, seen at $540-$545 a metric ton on cost and freight basis. Chinese buyers waited for domestic prices to stabilize.

Traders told Reuters that soybean buying had also slowed. With more than 4 million tons of U.S. beans reportedly booked so far, some traders even worried that China might find itself overbought again in two to three weeks. "The soymeal market is a concern," said another trader in southern China. "I think we are headed to a point where maybe we are a little bit overbought."

Traders interviewed by Reuters said domestic soymeal prices were down to around 2,600 yuan ($314) per ton, compared with about 3,000 yuan $362) in the south before the one-week holiday at the start of October.

Some traders quoted U.S. soybeans for November shipment at around $260 a ton cost and freight basis, while others said they had not checked the prices in the absence of enquiries. "We haven't had quotes for quite some time ... There are no serious enquiries," said one trader in Shanghai. "Crushing margins are decreasing."

According to the USDA, through Oct. 7 Chinese commitments to purchase U.S. soybeans totaled 3.745 million metric tons (127.7 million bushels), an increase of 35.9% over the year-earlier commitments of 2.756 million tons (101.3 million bushels), according to the USDA.

USDA reported another 2.393 million tons (87.9 million bushels) in sales to unknown destinations, many of which may be headed to China. But sales to unknown destinations are down 24.5% from a year earlier. Combined U.S. sales to China and unknown destinations as of Oct. 7 totaled 6.138 million tons (225.5 million bushels), 3.6% above a year earlier.

Editors note: Richard Brock, The Corn and Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at www.brockreport.com.