Freight rates force China to buy Indian soy

While traders at
a grains conference in Perth put Chinese soy meal purchases from
India at 50,000 tonnes, Chinese
industry officials said the country had booked 70,000-80,000 tonnes for shipment
between October and November. They said the price was $310-$330 a tonne,
including cost and freight.

“China is a bit
short of soybeans right now,” said one trader attending the conference. A
manager from a grains trader in China‘s southern province of Guangdong said: “There is a price gap.
Trading firms and feed mills are importing to take benefit of the
difference.”

The traders and
officials said China was interested in booking
possibly another 100,000 tonnes for shipment before the end of the year, if
prices did not surge further.

Freight rates
soar
With freight rates for dry cargoes up at new
records, costs for bringing soy from the US Pacific North West have more than
doubled since the start of the year to well beyond $100 a tonne. It would cost
even more for imports from the US Gulf.

This is making
soy imports from the US less attractive, despite a rebound
in Chinese soy meal prices, ahead of the national day holidays early in October,
especially as soy oil prices are under downward pressure.

Quarantine
threat
In addition, Chinese soy importers are
worrying about quarantine authorities, who have strengthened inspection of soy
cargoes from the US or
Argentina in a possible trade
backlash following a massive recall of toys made in China.
The traders said three or four cargoes from the two
origins faced delays in discharging soy or crushing as the quarantine
authorities found phytosanitary problems.

Demand
for animal feed was recovering both in the poultry and hog sector as high meat
prices have encouraged farmers to stock up on chickens and pigs, they added.
They were also replenishing feed stocks from very low levels earlier this year.