Ongoing Chinese soy surge stretches supplies
supplies as the country's highly stretched agriculture sector
struggles to keep up with surging domestic demand.
p> The newsletter Oil World said last week that more than 70 per cent of Chinese soybean crush requirements will have to be imported in 2004-05.
The newsletter commented on recent news of Chinese buyers rejecting soybean cargos on the grounds that they were contaminated. Oil World said that Chinese quarantine authorities had recently rejected soybean shipments with a fungicide contamination of 0.06 per cent, which is well below the international standard of a maximum 0.2 per cent contamination.
"This has created a high degree of uncertainty and confusion in South America as well as on the world market and it has contributed to the price weakness, primarily in the second half of May 2004," commented Oil World. "The uncertainty in the market was fueled by reports that Chinese crushers plan to cut their soybean imports by 40 to 50 per cent in July-December 2004," they added.
The American Soybean Association reports this week that the soy complex closed lower on 3 June reflecting a dry weather outlook and ongoing concerns about the potential for China to cancel a substantial number of cargoes.
"Expectations for a tight old-crop situation appear to have been undermined by lacklustre soybean meal basis levels. The June 30 stocks report will provide an important gauge of how tight remaining soybean supplies are, but by the time it comes out, the July contract will be entering its delivery month and August soybean futures may have questionable utility as a source of old-crop soybean supplies," said the ASA.
