Soybeans highest in 34 years on China demand

U.S. exporters reported sales of 1.81 million metric tons the week before last week, up 39 percent from the previous week and the second straight high in the year that began Sept. 1, the Department of Agriculture said Friday in a report. Citigroup Global Markets projected sales of 900,000 tons to 1.1 million tons. China, the biggest importer, accounted for 66 percent of last week’s total.

“Soybean exports are very good,” said Charlie Sernatinger, a market analyst for Fortis Clearing Americas LLC in Chicago. “The Chinese demand is insatiable.”

Soybean futures for January delivery rose 16.25 cents, or 1.5 percent, to US$11.0025 a bushel on the Chicago Board of Trade Friday. The price earlier reached US$11.0325, the highest for a most-active contract since July 1973. Futures were up for a seventh straight week and have surged 63 percent in the past year after U.S. farmers planted the fewest acres in 12 years.

U.S. reserve supplies of soybeans before next year’s harvest will shrink 63 percent to 210 million bushels, the USDA said Nov. 9. The surplus on Aug. 31 this year was estimated at a record 573 million bushels.

Cumulative U.S. soybeans sold for export in the year ending Aug. 31 are up 4.8 percent from the pace a year earlier, USDA data show. Sales in the year that started Sept. 1 are forecast to fall 13 percent from a year earlier to 975 million bushels, the USDA said recently.

Prices also rose on speculation China will extend a temporary reduction on soybean duties into 2008 and cut a tariff on vegetable oils. On Sept. 21, China cut import duties on soybeans to 1 percent from 3 percent for the three months through December and ordered corn, vegetable oil and pork to be sold from state reserves to curb food costs.

China’s soybean output may fall 12 percent this year to 14.3 million metric tons, the lowest since 1999, because of drought and a drop in planting, the USDA said.

China’s soybean-crushing capacity increased 19 percent on average in the past 10 years, reaching 35 million tons in the year ending Sept. 30, Chen Gang, vice general manager of the oilseed department at Cofco Ltd., China’s largest grain trader and processors, said on Nov. 20.

“China’s annual output growth is about 4.6 percent a year for pork, 2 percent for chicken, 5.6 percent for aquaculture, 28 percent for dairy and 5.4 percent for eggs,” Chen said. “In the next five years, soybean-crushing capacity is estimated to grow 5 percent a year, reaching 45.6 million tons by 2012.”

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