(Agrimoney) – Chinese officials stoked concerns over a reversal in soaring barley and sorghum imports, even as they reassured on soybean buy-ins in seeing stronger-than-expected purchases of the oilseed last month.
China, the top soybean buyer, imported 7.78m tonnes of the oilseed last month, customs data showed, a smaller drop than investors had expected from July’s record high of 9.5m tonnes.
Indeed, last month’s volumes, up 29% from imports in August 2014, were “exceptionally strong”, said Australia & New Zealand Bank, flagging the role of a devalued currency in Brazil, the top soybean exporting country, in supporting Chinese purchases.
On top of the drop in global soybean values, “a 60% appreciation in the remninbi against the Brazilian real in the last 12 months has pushed soybean prices to the cheapest levels since 2008 for Chinese buyers”, the bank said, flagging the prospect of further strength in imports.
While Chinese purchases are poised for a seasonal slowdown, “with the dramatic divergence in price levels between Chinese consumer and Brazilian exporters to continue, China’s imports are forecast to remain above levels a year ago until buyers switch their focus to the US soybean crop”.
Brazil in the January-to-August period exported 45.8m tonnes of soybeans – more than the 45.7m tonnes it shipped in the whole of last year.
Investors ‘unsettled’
The Chinese customs data provided some reassurance to soybean investors, who Commerzbank noted had been “unsettled” by a report late on Friday from US Department of Agriculture staff in Beijing issuing relatively low estimates for imports both in 2014-15 and next season.
The USDA bureau had counted on imports of roughly 13m tonnes over August and September, the last two months of 2014-15.
However, that looks likely to be exceeded, given the August figure, and a forecast from the CNGOIC, the official Chinese think tank, of imports of 6.47m tonnes this month.
That said, the relatively downbeat estimate for the USDA bureau of Chinese soybean imports of 78.0m tonnes in 2015-16 was predicated in part on ideas of large inventories built up by this season’s buying spree.
‘Curb imports’
Separately, the CNGOIC on Tuesday lowered by 3m tonnes to 229m tonnes its forecast for Chinese corn output this year, citing drought in parts of the main north east growing district.
However, with domestic stocks of the grain still large, this did not feed through into higher expectations for Chinese feed grain imports.
Indeed, the group said that “ample” corn supplies, and falling domestic prices, would “curb” imports of the grain.
And it also forecast a drop in imports of alternative feed grains too, seeing sorghum purchases fall to 7m tonnes in 2015-16, down 3m tonnes from the record the previous year.
For barley, imports will drop to 6.5m tonnes, from the 9.0m tonnes estimated for 2014-15.
‘Not an easy process’
The expectation of lower imports follows the spread to the crops, and cassava and distillers’ grains, of an import licensing system already applied to the likes of rapeseed and soybeans.
Observers have feared that the plans – viewed as an effort to encourage China’s feed users to focus on eroding the large stocks of corn – would undermine buy-ins of rival grains, with one trader last week telling Agrimoney.com last week that the system would mean “more control over imports, and lower volumes”.
The new regime is already being felt in French barley exports to China, “which have gone from 400,000-500,000 tonnes a month down to a mere trickle”, traders at a major European commodities house said.
“Imports of feed grains, including French barley, now have to be ‘registered’ with the [Chinese] authorities and this appears not to be an easy process.”
US sorghum surge
Meanwhile, for sorghum, the comments come at a time when US growers have hiked sowings of the grain, encouraged by the relatively elevated prices, particularly compared with corn, which have been supported by strong Chinese imports.
US sorghum output this year will jump 32% to a 16-year high of 14.5m tonnes, the US Department of Agriculture believes.
Chinese imported had, as of August 27, ordered 1.48m tonnes of US supplies for the new season.
The comparable figure a year ago was 1.11m tonnes, and in late August 2013, advance orders for the soon-to-start 2013-14 season were just 197,000 tonnes.
