According to Chinese customs statistics, June imports of soybeans totaled 6.2 million metric tons. The cumulative total for January to June was 25.8 mmt, up 16.8% year-on-year. A report on a grain bureau web site forecast that the huge 48 mmt import total for 2009/10 would grow to over 50 mmt in 2010/11.
The key to this growth is that imported soybeans are cheaper than domestic beans. A support price for Chinese beans made them artificially expensive, raising the cost of oils and soy meal made from them and reducing sales. Many domestic soybean-crushing plants are idle.
According to the report, as of July 19 domestic soybeans had an average price of 3536 yuan/mt, while imported beans were 3400 yuan/mt. The appreciation of the Chinese currency is one of the factors cited in eroding the price-competitiveness of domestic beans.
The vice-secretary of the Heilongjiang soybean association says about half of his province's 100 soybean crushing plants are idle and experiencing heavy losses. According to him, the situation is much worse than last year.
The situation may be about to improve. According to the report, U.S. and South American soybeans for August will rise to $455-457 CNF, which means RMB 3750-3770, higher than the purchase price of domestic soybeans.
The soymeal market is also on the rebound. It reached its low point in May. Feed mills have low stocks of soy meal and are now restocking, putting upward pressure on meal prices.