According to the June 4, 2008 monthly report on edible oils markets by China National Grain and Oils Information Center (NGOIC), soybean inventories at Chinese ports are at an historical high. In May soybean stocks at ports were estimated to be about 3.55 million metric tons, up 250,000 mt from April, and 1.4 mmt higher than the same period last year.
One reason given by NGOIC for the bulging stocks is an unusually large volume of soybeans arriving at ports. In May 3.5 mmt arrived; in June 3.8 mmt are expected and in July 3.3 mmt are expected—10.6 mmt in 3 months. That is up from about 8.5mmt for the same period in 2007 and 2006.
NGOIC also cites a slow-down in soybean crushing since April. Factories have accumulated high inventories of soy and palm oil and demand for oils has slackened. They don’t see an increase in soy oil demand on the near-term horizon and suggest that an increase in soymeal demand will have to lead the way in reviving crushing. The report sees little prospect on the inventory situation changing in the near-term.
Elsewhere in the NGOIC report a chart shows huge crushing margins for imported soybeans from July 2007 through February 2008. This period corresponded to upward trends in soy oil, meal, and bean prices. Margins then plunged into negative territory in April and May. This also corresponded to a flattening/decline of prices.