World’s largest soybean demand to support rally
China’s increasing soybean consumption, the world’s biggest, will sustain a rally in the prices of the oilseed, an executive of Noble Group Ltd. said.
The country consumes more soy cooking oil even as prices have doubled in the past year, and its increasing livestock need more soybean meal, Henry Wang, vice president of Noble’s China division, said at the JCI conference in Shenzhen on March 28.
Global soybean prices have declined 20 percent from a record on March 3 after some hedge funds and large institutional investors sold contacts to cover losses in other markets. Morgan Stanley last week raised its price forecasts for corn and soybeans by 20 percent on higher demand for food and ethanol.
“The bull in commodities will not end anytime soon,” Wang said. “Both feed protein and edible oil demand should keep rising pretty fast” in China.
Even after the decline from a record US$15.8625 a bushel on March 3, soybeans have gained 63 percent in the past year, after U.S. farmers planted the fewest acres in more than a decade. Soybeans for May delivery fell by the exchange limit of 60 cents to US$12.6725 on March 28.
Consumption of vegetable oil in the world’s most populous country should increase as much as 5 percent to 28 million metric tons this year, Wang said. The country’s supplies of soybean oil will be tight through June, as it has not booked enough orders, Wang said. “Most purchases this year were made by state reserves” to control prices.
The government “clearly indicated it wants to have 1.5 million to 2 million tons of soybean oil reserves by 2010, and they are far from that level. Perhaps they are waiting for better opportunities,” Wang said.
China’s imports of vegetable oil may reach 10 million tons in 2008, Wang said. The country’s imports were 8.4 million tons last year, according to custom data on Jan. 15. Soybean oil imports may be 2.5 million to 3 million tons, while palm oil may be over 6 million tons, he said.
Soybeans are crushed to make cooking oil, which accounts for about 20 percent of the processed products, while the remaining soybean meal is fed to hogs, cattle, poultry and fish.
The livestock sector in China, recovering from losses to animal disease and the worst snow storms in decades in February, will improve prices for soybean meal, Wang said. Livestock feed demand should grow as much as 8 percent this year, supporting soybean meal consumption starting in June, he said.
Tags: corn, farmer, food